<PAGE>
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---- EXCHANGE ACT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996; OR
---- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO _________.
COMMISSION FILE NUMBER: 1-10015
-------------------------------
HERITAGE MEDIA CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 42-1299303
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
13355 NOEL ROAD, SUITE 1500
DALLAS, TEXAS 75240
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code:
(972) 702-7380
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE.
PREFERRED STOCK PURCHASE RIGHTS.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if the disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K..........................[ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 3, 1997 is $369,497,300.
The number of shares outstanding of each of the issuer's classes of common
stock, as of March 3, 1997:
CLASS SHARES OUTSTANDING
----- ------------------
Common Stock, $.01 Par Value 34,772,342
<PAGE>
List hereunder the following documents incorporated by reference:
DOCUMENT PART OF FORM 10-K
-------- -----------------
None None
i
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PART I
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ITEM 1. BUSINESS.
Item 1 of the registrant Form 10-K previously filed on March 14, 1997
is hereby amended to add the following section:
1.(d) SUBSEQUENT EVENTS.
On March 17, 1997, the Company announced that it had entered into an
agreement with The News Corporation Limited ("News Corp.") pursuant to which
News Corp. will acquire the Company in a non-taxable merger transaction. The
transaction is subject, among other things, to approval by the Company's
stockholders and regulatory agencies. News Corp. will pay the equivalent of US
$20.50 for each of the 38.6 million shares, on a fully diluted basis, of the
Company (total value US $754 million) through the issuance of News Corp.'s
preferred limited voting ordinary ADRs. In addition, the Company's outstanding
indebtedness will be assumed (in the amount of approximately US $600 million as
of December 31, 1996).
In contemplation of the proposed merger with News Corp., the Company
amended its Rights Agreement on March 17, 1997. The amendment provides that each
of News Corp. and its subsidiary that will merge with the Company in the
proposed transaction will not be deemed an "acquiring person" under the Rights
Agreement. In addition, the Rights Agreement and the rights established thereby
will terminate in all respects upon the consummation of the proposed merger with
News Corp.
PART III
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Items 10 through 13 of the registrant's Form 10-K previously filed on March 14,
1997 are hereby amended to read in their entirety as follows:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
GENERAL
A brief description of each director and executive officer of the Company
is provided below. Directors hold office until the next annual meeting of the
stockholders or until their successors are elected and qualified. All officers
serve at the discretion of the Board of Directors.
James M. Hoak, 53, has served as Chairman of the Board of the Company since
August 1987. Mr. Hoak has also served as Chairman of Hoak Capital Corporation
(a private investment company) since
1
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September 1991, and as Chairman of HBW Holdings, Inc. (an investment banking and
broker-deal company) since 1995. Mr. Hoak served as Chairman and Chief
Executive Officer of Crown Media, Inc. (a cable television company) from 1991 to
1995. Mr. Hoak is a director of Midwest Resources, Inc., Pier 1 Imports, Inc.,
Dynamex, Inc. and Texas Industries, Inc.
David N. Walthall, 51, has served as President, Chief Executive Officer and
a director of the Company since August 1987.
Paul W. Fiddick, 47, has served as Executive Vice President and President,
Radio Group of the Company since August 1987.
Wayne W. LoCurto, 53, has served as an Executive Vice President of the
Company and as President, Actmedia since November 1989.
Michael T. McSweeney, 60, has served as an Executive Vice President of the
Company since February 1996 upon the acquisition by the Company of DIMAC
Corporation ("DIMAC"). Mr. McSweeney has been the Chief Executive Officer of
DIMAC since 1988 and was the Chairman of the Board of DIMAC from August 1995 to
February 1996. Mr. McSweeney has held various positions with DIMAC since 1988.
James J. Robinette, 63, has served as Executive Vice President and
President, Television Group of the Company since August 1987.
Wayne Kern, 64, has served as Senior Vice President and Secretary of the
Company since 1987. From July 1991 to March 1995, Mr. Kern also served as
Executive Vice President of Crown Media, Inc. From 1985 to 1991, Mr. Kern
served as the Executive or Senior Vice President, General Counsel and Secretary
of Heritage Communications, Inc. ("HCI"), a diversified communications company.
James P. Lehr, 49, has served as Senior Vice President--Chief Accounting
and Administrative Officer since December 1995. From December 1987 to December
1995, Mr. Lehr served as Vice President - Administration, Controller and
Assistant Secretary of the Company.
Douglas N. Woodrum, 39, has served as Executive Vice President-Chief
Financial Officer since December 1995. From January 1995 to December 1995, Mr.
Woodrum served as Vice President, Finance. From August 1987 to January 1995,
Mr. Woodrum served as Vice President, Development and Treasurer of the Company.
H. Berry Cash, 58, has been a partner of InterWest Partners, a venture
capital firm, since 1986. Mr. Cash also serves as Chairman of the Board of
Cyrix Corporation and serves on the board of directors of ProNet, Inc., Aurora
Electronics, Inc., BenchMarq Microelectronics, AMX Corporation and i2
Technologies, Inc. Mr. Cash has been a director of the Company since January
1996.
2
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James S. Cownie, 52, has been the Chairman of the corporate partner of New
Heritage Associates (a cable television firm unaffiliated with the Company)
since March 1991. Mr. Cownie was first elected as a director of the Company in
July 1989.
Joseph M. Grant, 58, has served as the Senior Vice President and Chief
Financial Officer of Electronic Data Systems, Inc. (an information technology
company) since December 1990. Mr. Grant has been a director of the Company
since June 1992.
Clark A. Johnson, 66, has served as the Chairman and Chief Executive
Officer of Pier 1 Imports, Inc. (a specialty retailer of home furnishings) since
1988. Mr. Johnson has been a director of the Company since March 1990. He also
serves as a director of Actava, Inc., Albertson's, Inc., AnaComp, Inc. and
Intertan, Inc.
Alan R. Kahn, 57, is a business consultant and private investor and was
President of Sun Country Industries, Inc. (a beverage distributor) from 1984 to
1988. Mr. Kahn has been a director of the Company since August 1987.
CERTAIN RETENTION AGREEMENTS
In October 1995, the Company entered into a merger agreement to acquire
DIMAC. Simultaneously with the execution and delivery of the merger agreement,
Heritage, DIMAC and certain of the key executive officers of DIMAC, including
Mr. McSweeney, entered into three-year Retention and Non-Competition Agreement.
Pursuant to Mr. McSweeney's Retention and Non-Competition Agreement (the
"McSweeney Retention Agreement") and in consideration of his willingness to
continue his employment with DIMAC through December 31, 1998, DIMAC and Heritage
agreed that the merger in which DIMAC became a wholly owned subsidiary of
Heritage would not result in any diminution or adverse change in (i) Mr.
McSweeney's duties and responsibilities to DIMAC, (ii) his organizational
position or reporting relationships, or (iii) his base salary, bonus or employee
benefits. The McSweeney Retention Agreement provides that, as of July 1, 1997,
Mr. McSweeney will be required to devote only a portion of his business time to
DIMAC and will relinquish his title and responsibilities as chief executive
officer at such time. In further consideration of the benefits received under
the McSweeney Retention Agreement, Mr. McSweeney agreed that, without the prior
written approval of the DIMAC Board of Directors, he will not directly or
indirectly, in any capacity participate in, engage in, own or invest in any
business which is engaged in providing direct marketing services in the United
States for a period ending two years after the termination of the McSweeney
Retention Agreement.
In March 1997, simultaneously with the execution of the merger agreement by
the Company, News Corp. and a subsidiary of News Corp., the Company and certain
of its executive officers, key employees and corporate staff employees entered
into Retention Agreements. The Retention Agreements entered into by the Company
and each of Messrs. Walthall, Fiddick, LoCurto, Robinette, Kern, Lehr and
Woodrum (collectively, the "Executives") provide that the proposed merger of the
Company with and into a subsidiary of News Corp. will not result in (i) any
material diminution of the scope of such Executive's duties and responsibilities
for the Company or (ii) a reduction in such Executive's base salary, target
3
<PAGE>
bonus, bonus plan parameters and employee benefits. If the Company terminates
the Executive's Retention Agreement for any reason other than cause (as defined
in such Retention Agreements), the Executive will receive 24 months base salary
as severance pay if such termination is prior to the first anniversary date of
the merger with News Corp. or, if such termination is after the first
anniversary of the merger with News Corp., 12 months base salary as severance
pay.
COMPENSATION OF DIRECTORS
Each director who is not an officer or employee of the Company receives, in
addition to the basic annual fee of $20,000, $1,000 per Board meeting (or
committee meeting not in conjunction with a Board meeting) held in person or
$200 if the meeting is held by telephone. The chairman of each of the audit and
compensation committees receives an additional $3,000 annually. Any non-employee
director may elect to defer such fees for later payment with an interest
equivalent or invest such fees in shares of the Company's Common Stock. When
first elected, directors who are not officers or employees of the Company are
granted options (vesting in full after two years of service and expiring ten
years after the date of grant) to acquire 4,000 shares of Common Stock at the
fair market value of such stock on the date of grant. Thereafter, options to
purchase an additional 4,000 shares of Common Stock are granted annually.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Under the securities laws of the United States, the Company's directors and
executive officers and persons who own more than 10% of the Company's Common
Stock are required to report their initial ownership of the Company's Common
Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates have been established for these
reports, and the Company is required to disclose in this proxy statement any
failure to file by these dates. All of these filing requirements were satisfied
during 1996.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth information concerning cash compensation
paid or accrued by the Company during the three years ended December 31, 1996 to
or for the Company's chief executive officer and the four other highest
compensated executive officers of the Company.
4
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<TABLE>
<CAPTION>
NAME AND SECURITIES LTIP ALL OTHER
PRINCIPAL UNDERLYING PAYOUTS COMPENSATION
POSITION YEAR SALARY BONUS(1) OPTIONS/SARS (2) (3)
- -------- ---- ------ -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Walthall 1996 $450,000 $331,004 96,000 $3,000
CEO and Pres. 1995 385,000 211,970 100,000 3,000
1994 337,000 269,600 100,000 4,500
Mr. LoCurto 1996 360,000 324,000 64,000 3,000
Exec. V.P. 1995 300,000 110,952 60,000 3,000
1994 275,000 165,000 60,000 $3,371,500 4,500
Mr. Robinette 1996 248,325 115,275 10,000 3,000
Exec. V.P. 1995 231,000 129,845 --- 3,000
1994 210,000 147,000 --- 4,500
Mr. McSweeney (4) 1996 275,000 137,500 -- --
Exec. V.P.
Mr. Hoak 1996 240,000 144,438 48,000 3,000
Chairman 1995 240,000 82,585 70,000 3,000
1994 240,000 120,000 70,000 4,500
</TABLE>
________________
(1) Bonus for 1996 paid in 1997.
(2) In 1991, Mr. LoCurto was granted 10,000 units under the Actmedia Stock
Appreciation Rights Plan of 1990. Pursuant to this plan, certain executive
officers of the Company's Actmedia, Inc. subsidiary received grants of
phantom equity units reflecting the fair market value of the common share
equity of Actmedia. Persons who received grants of such units received in
1995 cash or shares of the Company's Common stock in an amount equal to the
difference between the value per unit on December 31, 1994 and the base
value on the date of grant with respect to all vested units.
(3) Amounts reflected represent the Company's contribution to its defined
contribution plan on behalf of the named executive officers.
(4) Mr. McSweeney was not an executive officer of the Company prior to
acquisition by the Company of DIMAC in February 1996.
STOCK OPTIONS
The following table sets forth certain information with respect to the
options granted during the year ended December 31, 1996 to the executive
officers named in the above compensation table:
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term (1)
- ----------------------------------------------------------------------- ---------------
Percent of
Total
Options
Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ---- ------- ---- ------ ---- ----- ------
<S> <S> <C> <C> <C> <C> <C>
Mr. Walthall 96,000 6.0% $10.500 12-23-06 $751,206 $1,793,242
Mr. LoCurto 64,000 4.0 10.500 12-23-06 500,804 1,195,495
Mr. Robinette 10,000 0.6 10.500 12-23-06 78,251 186,796
Mr. McSweeney 0.00 n/c n/a n/a n/a n/a
Mr. Hoak 48,000 3.0 10.500 12-23-06 375,603 896,621
</TABLE>
__________________
5
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(1) The assumed annual appreciation rates are disclosed pursuant to the rules
of the Securities and Exchange Commission and are not intended to forecast
future appreciation of the Company's Common Stock.
The following table sets forth certain information with respect to the
options exercised by the executive officers named in the above compensation
table during the year ended December 31, 1996 or held by such persons at
December 31, 1996:
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options
Shares Options at at
Acquired December 31, 1996 December 31, 1996 (1)
on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- ------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Walthall 0 N/A 367,122 196,000 $1,400,390 $72,000
Mr. LoCurto 0 N/A 183,646 124,000 684,065 48,000
Mr. Robinette 0 N/A 0 10,000 0 7,500
Mr. McSweeney 0 N/A 279,100(2) 0 1,464,555 36,000
Mr. Hoak 0 N/A 225,840 118,000 1,077,025 36,000
</TABLE>
__________________
(1) Based upon the closing price of the Common Stock of the Company on December
31, 1996, which price was $11.25 per share.
(2) The options indicated were granted by DIMAC to Mr. McSweeney and, as a
result of the merger of DIMAC with a subsidiary of the Company, the options
were assumed by Heritage.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information as to the beneficial
ownership of the Company's Common Stock as of March 10, 1997 by (i) each person
who is known to beneficially own more than 5% of each such class, (ii) each
director of the Company, (iii) certain named executive officers and (iv) all
officers and directors as a group. Unless otherwise indicated, each of the
persons named below has sole voting and investment power with respect to the
shares of Common Stock beneficially owned by such person. The Company has no
other classes of stock outstanding other than the Common Stock.
6
<PAGE>
No. of Shares
Name and Address (1) (2) Percent
James M. Hoak (3) 2,248,152 6.5%
13355 Noel Road, Suite 1500
Dallas, Texas 75240
James S. Cownie(4) 336,146 *
David N. Walthall 645,672 1.8
Joseph M. Grant 20,000 *
Clark A. Johnson 13,500 *
Alan R. Kahn 34,914 *
Wayne W. LoCurto (5) 278,706 *
Michael T. McSweeney (6) 294,118 1.0
James J. Robinette --- ---
H. Berry Cash --- ---
J. W. Seligman & Co. Incorporated
100 Park Avenue (7)
New York, NY 10017 2,950,875 8.5
Massachusetts Financial Services 2,096,875 6.0
Company(8)
500 Boylston St.
Boston, MA 02116
Janus Capital Corporation(9) 2,287,050 6.6
100 Fillmore St.
Suite 300
Denver, CO 80206
All officers and directors 4,425,044 12.0
as a group (14 persons)
______________________________
* Less than 1%
(1) Includes shares issuable upon exercise of stock options which are vested or
will be vested prior to May 10, 1997.
(2) Excludes shares allocated to participants' accounts under the Company's
Retirement Savings Plan.
(3) Includes 70,732 shares of Common Stock held by Mr. Hoak's wife and children
and shares held by the James M. Hoak, Jr. and Nancy J. Hoak Foundation.
Mr. Hoak disclaims beneficial ownership of such shares.
(4) Includes 64,010 shares of Common Stock held by Mr. Cownie's family and
charitable trust. Mr. Cownie disclaims beneficial ownership of such
shares.
(5) Includes 100 shares of Common Stock held by Mr. LoCurto's children. Mr.
LoCurto disclaims beneficial ownership of such shares.
(6) Includes 130,000 shares held by Mr. McSweeney's family trusts. Mr.
McSweeney disclaims beneficial ownership of such shares.
(7) Based on information contained in Schedule 13G dated February 13, 1997. Of
the shares indicated, J. W. Seligman & Co. Incorporated has sole voting
power over 2,483,030 shares, has the sole dispositive power over 2,950,875
shares and does not share voting or dispositive power over any of the
shares indicated.
(8) Based on information contained in amended Schedule 13G dated February 12,
1997. Massachusetts Financial Services Company ("MFS") has sole voting
power over 1,852,275 shares and sole dispositive power over 2,096,917
shares. MFS shares the beneficial ownership of the share indicated with
certain non-reporting entities.
(9) Based on information contained in amended Schedule 13G dated February 10,
1997, filed jointly on behalf of Janus Capital Corporation ("Janus
Capital") and Thomas H. Bailey (the "Janus Group"). Janus Capital is a
registered investment advisor. Mr. Bailey owns approximately 12.2% of
Janus Capital and serves as President and Chairman of the Board of Janus
Capital and as a result of such stock ownership and positions may be deemed
to exercise control over Janus Capital. The Janus Group does not have sole
dispositive and voting power with respect to any of the shares indicated
and shares voting and dispositive power with respect to all of the shares
indicated.
7
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See Item 10 - "Retention Agreements" for a description of retention
agreements the Company has entered into with certain of its executive officers.
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
The exhibit index to the registrant's Form 10-K previously filed on March
14, 1997 is hereby amended as set forth on the "Exhibit Index" included herein.
(a)(3) Exhibits:
See "Exhibit Index" included herein.
8
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Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Form 10K/A to be
signed on its behalf by the undersigned, thereunto duly authorized on April 7,
1997.
HERITAGE MEDIA CORPORATION
By /s/ Douglas N. Woodrum
________________________________
Douglas N. Woodrum
Chief Financial Officer
9
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HERITAGE MEDIA CORPORATION
INDEX TO EXHIBITS
EXHIBIT
NUMBER
------
2(a) Agreement and Plan of Merger, dated as of March 17, 1997, by and among
the registrant, The News Corporation Limited and HMC Acquisition Corp.
(1)
3(a) Certificate of Incorporation (2)
3(b) Bylaws (2)
4(a) Indenture, dated as of June 15, 1992 of Heritage Media Services, Inc.
("HMSI") to Bankers Trust Company, as trustee (3)
4(b) Form of Pledge Agreement among the registrant, certain subsidiaries of
the registrant, Bankers Trust Company and Citibank N.A. (3)
4(c) Indenture dated as of October 1, 1992 of the registrant to Bank of
Montreal Trust Company, as trustee (4)
4(d) Indenture, dated as of February 15, 1996, of the registrant to The
Bank of New York, as trustee (5)
4(e) Rights Agreement, dated as of August 15, 1994, between the registrant
and The Bank of New York, as Rights Agent (6)
4(f) Amendment to Rights Agreement, dated as of March 17, 1997, between the
registrant and The Bank of New York, as Rights Agent (1)
4(g) First Supplemental Indenture, dated as of February 15, 1996, of the
registrant to The Bank of New York, as trustee (7)
10(a) Credit Agreement, dated as of February 21, 1996, among DIMAC
Corporation, Citibank, N.A., as Administrative Agent, and NationsBank
of Texas, N.A., as Documentation Agent (7)
10(b) Credit Agreement, dated as of June 22, 1992, among HMSI, the banks
named therein, Citibank, N.A., as agent and NationsBank of Texas,
N.A., as co-agent (3)
10(c) Credit Agreement, dated as of May 31, 1996, among HMSI, the banks
named therein, Citibank, N.A., as Administrative Agent, and
NationsBank of Texas, N.A., as Documentation Agent (1)
10(d) Registrant's 1987 Option Plan, as amended (2)
10(e) Registrant's 1996 Option Plan (2)
21 Subsidiaries of the registrant (8)
23(a) Consent of KPMG Peat Marwick LLP (8)
27 Financial Data Schedules (8)
__________
(1) Filed herewith.
E-1
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(2) Filed as an exhibit to the Company's proxy statement for the Annual
Meeting held on May 16, 1996.
(3) Filed as an Exhibit to the registrant's Registration Statement No.
33-47953 on Form S-2 and incorporated herein by reference.
(4) Filed as an Exhibit to the registrant's Registration Statement No.
33-52062 on Form S-2 and incorporated herein by reference.
(5) Filed as an Exhibit to the registrant's Registration Statement No.
33-63963 on Form S-3 and incorporated herein by reference.
(6) Filed as an Exhibit to the registrant's Form 8-K filed August 29, 1994
and incorporated herein by reference.
(7) Filed as an Exhibit to the registrant's Form 10-K for the year ended
December 31, 1995.
(8) Previously filed.
E-2
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 17, 1997, by and among
HERITAGE MEDIA CORPORATION, a Delaware corporation (the "Company"), THE NEWS
CORPORATION LIMITED (ACN 007 910 330), a South Australia corporation ("News
Corp."), and HMC ACQUISITION CORP., a Delaware corporation and a wholly-owned
direct subsidiary of News Corp. ("Merger Sub").
RECITALS
WHEREAS, it is the intention of the parties that the Company merge with and
into Merger Sub (the "Merger"), with the Merger Sub surviving as a wholly-owned
direct subsidiary of News Corp.;
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a tax-free reorganization under the provisions of Section 368(a) of
the Internal Revenue Code of 1986, as amended, and any successor statute (the
"Code");
WHEREAS, as a condition to the willingness of News Corp. and Merger Sub to
enter into this Agreement, the Company has agreed to enter into an agreement
providing for the transfer of title of all outstanding shares of HMI
Broadcasting Corp., an indirect wholly-owned subsidiary of the Company ("HMI"),
to a trust for the sole benefit of the Company; and
WHEREAS, the Boards of Directors of News Corp., Merger Sub and the Company
have determined that the transactions contemplated by this Agreement (the
"Transactions"), including, without limitation, the Merger, are advisable and in
the best interest of their respective corporations and stockholders and have
approved this Agreement;
NOW, THEREFORE, in consideration of the mutual representations, warranties
and agreements contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
<PAGE>
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.2), in accordance
with the General Corporation Law of the State of Delaware (the "DGCL"), the
Company shall be merged with and into Merger Sub in accordance with this
Agreement and the separate existence of the Company shall cease. Merger Sub
shall be the surviving corporation in the Merger (hereinafter sometimes referred
to as the "Surviving Corporation").
Section 1.2 EFFECTIVE TIME OF THE MERGER. Upon the terms and subject to
the conditions hereof, a certificate of merger (the "Certificate of Merger")
shall be duly prepared, executed and acknowledged by the Surviving Corporation
and thereafter delivered to the Secretary of State of the State of Delaware, for
filing, on the Closing Date (as defined in Section 1.3). The Merger shall become
effective as of the date and at such time as the Certificate of Merger pursuant
to Section 251 of the DGCL and any other documents necessary to effect the
Merger in accordance with the DGCL are duly filed (the "Merger Filing") with the
Secretary of State of the State of Delaware or at such subsequent date or time
as shall be agreed by the Company and News Corp. and specified in the
Certificate of Merger (the time the Merger becomes effective pursuant to the
DGCL being referred to herein as the "Effective Time").
Section 1.3 CLOSING. Subject to the satisfaction or waiver of all of the
conditions to closing contained in Article VII hereof, the closing of the Merger
(the "Closing") will take place at 10:00 a.m., New York City time, on a date to
be specified by the parties, which shall be no later than the fifth Business Day
(as defined below) after the satisfaction or waiver of the conditions to Closing
contained in Article VII hereof, at the offices of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, 551 Fifth Avenue, New York, New York 10176, unless another date
or place is agreed to in writing by the parties hereto. The date and time at
which the Closing occurs is referred to herein as the "Closing Date." "Business
Day" shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in New York City are not required to be open.
Section 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS.
(a) The Certificate of Incorporation of Merger Sub as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until amended in accordance with the
terms thereof and with applicable law.
2
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(b) The By-Laws of Merger Sub in effect at the Effective Time shall
be the By-Laws of the Surviving Corporation until amended in accordance with the
terms thereof and with applicable law.
Section 1.6 DIRECTORS. The directors of Merger Sub at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
from the Effective Time in accordance with the Certificate of Incorporation and
By-Laws of the Surviving Corporation and until his or her successor is duly
elected and qualified.
Section 1.7 OFFICERS. The officers of Merger Sub at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
from the Effective Time in accordance with the Certificate of Incorporation and
By-Laws of the Surviving Corporation and until his or her successor is duly
appointed and qualified.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
outstanding shares of capital stock of the Company or of the holder of any
shares of capital stock of Merger Sub:
(a) EXCHANGE RATIO FOR COMPANY COMMON STOCK. Subject to Section
2.2(e), each issued and outstanding share of Common Stock, par value $.01 per
share (the "Company Common Stock"), of the Company shall be converted into the
right to receive that number of American Depositary Shares of News Corp. (the
"News Corp. Preferred ADRs"), each of which represents four fully paid and
nonassessable Preferred Limited Voting Ordinary Shares, par value A$.50 per
share, of News Corp. (the "News Corp. Preferred Stock"), equal to the quotient
(the "Exchange Ratio") of (x) $20.50 divided by (y) the average of the daily
closing price of News Corp. Preferred ADRs on the New York Stock Exchange
("NYSE") Composite Tape on the twenty consecutive trading days ending on the
date which is five Business Days prior to the date of the Company Meeting (as
defined in Section 6.8 hereof) (the "Effective Date Price"); PROVIDED, HOWEVER,
that, if the Effective Time has not occurred within two days after the date of
the Company Meeting, the denominator of the Exchange Ratio referred to in the
foregoing subclause (y) shall be equal to the average of the daily closing price
of the News Corp. Preferred ADRs on the NYSE Composite Tape on the twenty
consecutive trading days ending on the date which is five Business Days prior to
the Effective Time. All such shares of Company Common Stock, when so converted,
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate that, immediately
prior to the Effective Time, represented outstanding shares of Company Common
Stock (the "Common Stock Certificates") shall cease to have any rights with
respect thereto, except the right to receive, upon the surrender of such Common
Stock Certificate, the News Corp. Preferred ADRs to which such holder is
entitled pursuant to this Section 2.1(a), as represented by one or more
certificates, and any cash in lieu of fractional News Corp. Preferred ADRs to be
issued or paid in consideration therefor in accordance with Section 2.2(e) and
any dividends or distributions to which such holder is entitled pursuant to
Section 2.2(c), in each case without interest. All shares of capital
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stock of the Company that are owned by the Company as treasury stock shall not
convert into the right to receive News Corp. Preferred ADRs in accordance with
this Section 2.1(a).
(b) EXCHANGE RATIO FOR COMPANY STOCK OPTIONS.
(i) At the Effective Time, each outstanding Company Stock
Option (as defined in Section 3.2) shall, to the extent provided for in the
Company Stock Option Plans (as defined in Section 3.2), vest and be exercisable,
if not vested and exercisable at such time, and all Company Stock Options shall
be adjusted in accordance with the terms thereof and this Agreement to be
exercisable to purchase News Corp. Preferred ADRs, as provided below. Following
the Effective Time, each Company Stock Option shall continue to have, and shall
be subject to, the same terms and conditions set forth in the Company Stock
Option Plans or any other agreement pursuant to which such Company Stock Option
was subject immediately prior to the Effective Time, except as set forth in this
Section 2.1(b) and except that (A) each such Company Stock Option shall be
exercisable for that number of News Corp. Preferred ADRs equal to the product of
(1) the aggregate number of shares of Company Common Stock for which such
Company Stock Option was exercisable and (2) the Exchange Ratio; PROVIDED,
HOWEVER, that no Company Stock Option shall be exercisable for a fractional News
Corp. Preferred ADR, and holders of a Company Stock Option exercisable for a
fractional News Corp. Preferred ADR shall be entitled to receive, upon exercise
thereof, an offset against the aggregate exercise price of the Company Stock
Options being exercised therewith, such offset to be determined by multiplying
the fraction of a News Corp. Preferred ADR to which a holder of a Company Stock
Option would be entitled to receive times the excess of the closing price of the
News Corp. Preferred ADRs as reported on the NYSE Composite Tape on the date of
exercise over the exercise price of such Company Stock Option, and (B) the
exercise price per News Corp. Preferred ADR issuable pursuant to such Company
Stock Option shall be equal to the aggregate exercise price of such Company
Stock Option at the Effective Time divided by the number of News Corp. Preferred
ADRs for which such Company Stock Option shall be exercisable as determined in
accordance with the preceding clause (A), rounded up to the next highest cent,
if necessary.
(ii) Prior to the Effective Time, the Company shall make
such amendments, if any, to the Company Stock Option Plans as shall be necessary
to permit the assumption and adjustment and other terms referred to in this
Section 2.1(b) and, if requested by News Corp., to comply with the requirements
of the Australian Stock Exchange ("ASX") or Australia law; PROVIDED, HOWEVER,
that any such amendments requested by News Corp. shall not affect in any respect
the number of News Corp. Preferred ADRs issuable upon exercise of Company Stock
Options or the exercise price thereof. As soon as practicable after the
Effective Time, the Surviving Corporation shall deliver to the participants in
the Company Option Plans notices advising them of the Merger and setting forth
the formula for converting shares of Company Common Stock issuable upon the
exercise of Company Stock Options into News Corp. Preferred ADRs.
(iii) At the time that a Company Stock Option is exercised in
accordance with the terms hereof, News Corp. shall, pursuant to the terms of the
Deposit Agreement (as defined below), (x) deposit with the Custodian (as defined
in the Deposit Agreement) the shares of News Corp. Preferred Stock underlying
the News Corp. Preferred ADRs to be issued upon such exercise and (y) instruct
the Depositary (as defined below) to deliver the News Corp. Preferred ADRs
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to be issued upon such exercise in accordance with the written instructions of
the holder of such Company Stock Option so exercised. For purposes of this
Agreement, "Depositary" shall mean Citibank, N.A., as Depositary, pursuant to
the Amended and Restated Deposit Agreement, dated as of December 3, 1996, among
News Corp., the Depositary and the holders from time to time of News Corp.
Preferred ADRs (the "Deposit Agreement").
(iv) News Corp. shall (i) file a registration statement on
Form S-8 (or amend an existing registration statement on Form S-8) to become
effective as of the Effective Time with respect to the News Corp. Preferred ADRs
subject to Company Stock Options; (ii) maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding;
(iii) promptly prepare and submit to the NYSE applications covering the News
Corp. Preferred ADRs subject to Company Stock Options and use commercially
reasonable efforts to cause such securities to be approved for listing on the
NYSE prior to the Effective Time, subject to official notice of issuance; and
(iv) within ten days after the Effective Time, prepare and submit to the ASX,
pursuant to the Listing Rules of the ASX, applications covering the News Corp.
Preferred Stock underlying the News Corp. Preferred ADRs to be issued upon the
exercise of Company Stock Options.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT; DEPOSITARY. News Corp., pursuant to the terms of
the Deposit Agreement, shall (i) prior to the Effective Time, (A) deposit with
the Custodian the shares of News Corp. Preferred Stock underlying the News Corp.
Preferred ADRs to be issued in the Merger and (B) instruct the Depositary to
deposit the News Corp. Preferred ADRs to be issued in the Merger with News
Corp.'s transfer agent for the News Corp. Preferred ADRs or with such other bank
or trust company designated by News Corp. with an office or agency in the City
of New York, New York (the "Exchange Agent"), for the benefit of the holders of
shares of Company Common Stock, for exchange in the Merger in accordance with
this Article II, through the Exchange Agent; and (ii) from time to time as
necessary at or after the Effective Time, deposit with the Exchange Agent cash
to be paid in lieu of fractional News Corp. Preferred ADRs pursuant to Section
2.2(e) (such certificates representing News Corp. Preferred ADRs, together with
any dividends or distributions with respect thereto to which the holders of
shares of Company Common Stock may be entitled to pursuant to Section 2.2(c),
and cash in lieu of fractional News Corp. Preferred ADRs, being hereinafter
referred to as the "Exchange Fund").
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, News Corp. shall cause the Exchange Agent to mail to each holder
of record of Company Common Stock immediately prior to the Effective Time whose
shares were converted, pursuant to the Merger, into the right to receive News
Corp. Preferred ADRs (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other customary provisions as News Corp., in
consultation with the Company, may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for certificates
representing News Corp. Preferred ADRs which such holder has the right to
receive pursuant to the provisions of this Article II. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by News Corp., together with such letter of
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transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor certificates representing that whole number of News
Corp. Preferred ADRs which such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. News Corp. or the Surviving Corporation shall pay any
transfer or other similar taxes required by reason of the issuance and receipt
by the former stockholders of the Company of the News Corp. Preferred ADRs
pursuant to the provisions of this Article II; PROVIDED, HOWEVER, in the event
of a transfer of ownership of shares of Company Common Stock which is not
registered in the transfer records of the Company, certificates representing the
proper number of News Corp. Preferred ADRs may be issued to a transferee if the
Certificate representing such shares of Company Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed, at any time after the Effective Time, to represent only the
right to receive upon such surrender certificates representing the News Corp.
Preferred ADRs and any cash in lieu of fractional News Corp. Preferred ADRs, as
contemplated by this Section 2.2 and any dividends or distributions to which a
holder may be entitled. No interest will be paid or will accrue on any cash paid
or payable in lieu of any fractional News Corp. Preferred ADRs.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED COMPANY COMMON STOCK.
No dividends or other distributions declared or made after the Effective Time
with respect to News Corp. Preferred ADRs with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the News Corp. Preferred ADRs issuable hereunder in respect thereof, and no
cash payment in lieu of fractional News Corp. Preferred ADRs shall be paid to
any such holder pursuant to Section 2.2(e), until the holder of record of such
Certificate shall surrender such Certificate. Subject to the effect of
applicable Laws (as defined in Section 3.4(a)), following surrender of any such
Certificate there shall be paid to the record holder of the certificates
representing News Corp. Preferred ADRs issued in exchange therefor, without
interest, (i) at the later of (A) the time of such surrender and (B) the day
following the Effective Time, the amount of any cash payable in lieu of a
fractional News Corp. Preferred ADR to which such holder is entitled pursuant to
Section 2.2(e) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole News
Corp. Preferred ADRs, and (ii) if the payment date for any dividend or
distribution payable with respect to such whole News Corp. Preferred ADRs has
not occurred prior to the surrender of such Certificate, at the appropriate
payment date therefor, the amount of dividends or other distributions with a
record date after the Effective Time but prior to the surrender of such
Certificate.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All News
Corp. Preferred ADRs issued upon the surrender for exchange of shares of Company
Common Stock pursuant to the Merger and in accordance with the terms hereof
(including any cash paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed
to have been issued in full satisfaction of all rights pertaining to such shares
of Company Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which may have been declared or made by the
Company on such shares of Company Common Stock in accordance with the terms of
this Agreement or prior to the date hereof and which remain unpaid at the
Effective Time, and from and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the
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shares of Company Common Stock which are converted pursuant to the Merger and
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged for News Corp. Preferred ADRs,
together with any cash in lieu of fractional News Corp. Preferred ADRs and any
dividends or distributions with respect to News Corp. Preferred ADRs, as
provided in this Article II.
(e) NO FRACTIONAL SHARES. No certificate or scrip representing
fractional News Corp. Preferred ADRs shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests shall not entitle
the owner thereof to any rights as a security holder of News Corp. All holders
entitled to receive a fractional News Corp. Preferred ADR shall be entitled to
receive, in lieu thereof, an amount in cash determined by multiplying (i) the
fraction of a News Corp. Preferred ADR to which such holder would otherwise have
been entitled times (ii) the Effective Date Price.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the holders of shares of Company Common Stock on
the second anniversary of the Effective Time shall be delivered to News Corp.,
upon demand, and any holders of shares of Company Common Stock who have not
theretofore delivered all of their Certificates in accordance with Section 2.2
shall thereafter look only to News Corp. for payment of their claim for News
Corp. Preferred ADRs, any cash in lieu of fractional News Corp. Preferred ADRs
and any dividends or distributions with respect to News Corp. Preferred ADRs.
(g) NO LIABILITY. Neither News Corp., the Company nor the Exchange
Agent shall be liable to any holder of shares of Company Common Stock or News
Corp. Preferred ADRs, as the case may be, for such shares (or dividends or
distribution with respect thereto) or cash in lieu of fractional shares
delivered to a public official pursuant to any applicable abandoned property,
escheat, or similar Law.
(h) DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, shares of Company Common Stock (the "Shares") outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
appraisal for such Shares in accordance with Section 262 of the DGCL, if such
Section 262 provides for appraisal rights for such Shares in the Merger
("Dissenting Shares"), shall not be converted into a right to receive the Merger
consideration, as provided in Section 2, unless such holder fails to perfect or
withdraws or otherwise loses his right to appraisal. If, after the Effective
Time, such holder fails to perfect or withdraws or loses his right to appraisal,
such Shares shall be treated as if they had been converted as of the Effective
Time into a right to receive the Merger consideration, without interest thereon.
The Company shall give News Corp. prompt notice of any demands received by the
Company for appraisal of Shares, and, prior to the Effective Time, News Corp.
shall have the right to participate in all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company shall not,
except with the prior written consent of News Corp., make any payment with
respect to, or settle or offer to settle, any such demands.
Section 2.3 CLOSING OF TRANSFER BOOKS. From and after the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock
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converted pursuant to the Merger shall thereafter be made. If, after the
Effective Time, Certificates representing such shares are presented to News
Corp., they shall be canceled and exchanged for News Corp. Preferred ADRs,
together with any cash in lieu of fractional News Corp. Preferred ADRs and any
dividends or distributions with respect to News Corp. Preferred ADRs, as
provided in this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to News Corp. and Merger Sub
that:
Section 3.1 ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES.
(a) The Company and each Company Subsidiary (as defined below) is a
corporation, partnership or other legal entity duly incorporated or organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite power and authority and all
governmental permits, approvals and other authorizations necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental permits, approvals
and other authorizations would not, individually or in the aggregate, have a
material adverse effect on the business, assets, financial or other condition,
or results of operations of the Company and the Subsidiaries (as defined below)
of the Company (each, a "Company Subsidiary"), taken as a whole (a "Company
Material Adverse Effect").
(b) Attached as Schedule 3.1 is an organizational chart that includes
the Company and all Company Subsidiaries. Except as set forth on Schedule 3.1,
all outstanding shares of capital stock of each Company Subsidiary are owned
either by the Company or another Company Subsidiary. For purposes of this
Agreement, a "Subsidiary" of any person means (A) a corporation in which such
person, a subsidiary of such person, or such person and one or more subsidiaries
of such person, directly or indirectly, at the date of determination, has either
(i) a majority ownership interest or (ii) the power, under ordinary
circumstances, to elect, or to direct the election of, a majority of the board
of directors of such corporation or (B) a partnership in which such person, a
subsidiary of such person, or such person and one or more subsidiaries of such
person (i) is, at the date of determination, a general partner of such
partnership, or (ii) has a majority ownership interest in such partnership or
the right to elect, or to direct the election of, a majority of the governing
body of such partnership, or (C) any other person (other than a corporation or a
partnership) in which such person, a subsidiary of such person, or such person
and one or more subsidiaries of such person has either (i) at least a majority
ownership interest or (ii) the power to elect, or to direct the election of, a
majority of the directors or other governing body of such person.
Section 3.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock and 10,000,000 shares of
preferred stock, par value $.01 per share, of which 800,000 shares were
designated as Series A Junior Participating Preferred Stock ("Series A Stock").
As of the date hereof, (a) 35,728,998 shares of Common Stock were
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issued and 34,772,342 were issued and outstanding, all of which were validly
issued, fully paid and nonassessable; (ii) no shares of Series A Stock were
issued and outstanding; (iii) 3,841,504 shares of Company Common Stock were
reserved for issuance upon exercise of outstanding stock options (the "Company
Stock Options") granted pursuant to the Company's stock option plans (the
"Company Stock Option Plans"); (iv) 1,430,000 shares of Common Stock were
reserved for issuance upon exercise of options available for grant under the
Company Stock Option Plan; (v) 35,728,998 preferred stock purchase rights (the
"Purchase Rights") were issued and 34,772,342 Purchase Rights were issued and
outstanding, and the rights agreement pursuant to which the Purchase Rights have
been issued has been amended to exclude the Merger and the other Transactions as
triggering events thereunder; and (vi) 956,656 shares of Company Common Stock
were held as treasury shares. All of the Company Stock Options have been duly
and validly authorized and issued in compliance with all federal and state
securities laws and regulations. Except as set forth above or in Schedule 3.2,
no shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. Except as set forth above or in
Schedule 3.2, there are no options or agreements relating to the issued or
unissued capital stock of the Company or any Company Subsidiary, or obligating
the Company or any Company Subsidiary to issue, transfer, grant or sell any
shares of capital stock of, or other equity interests in, or securities
convertible into or exchangeable for any capital stock or other equity interests
in, the Company or any Company Subsidiary. Except for required repurchases of
options or stock upon termination of employment to the extent required by
agreements in effect on the date hereof, there are no outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or any other shares of
capital stock of the Company or any Company Subsidiary.
Section 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and, subject to adoption of this Agreement
by a majority of the issued and outstanding shares of Company Common Stock (the
"Company Stockholder Approval"), to consummate the Transactions. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the Transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
Transactions other than Company Stockholder Approval. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by News Corp. and Merger Sub,
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and by equitable principles to which the remedies of
specific performance and injunctive and similar forms of relief are subject and
except that rights to indemnity hereunder may be subject to federal or state
securities laws or the policies underlying such laws.
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Section 3.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS; CERTAIN
CONTRACTS.
(a) Except as set forth in Schedule 3.4 and subject to obtaining
Company Stockholder Approval, the execution and delivery of this Agreement by
the Company do not, and the performance of its obligations under this Agreement
and the consummation of the Transactions by the Company will not, (i) conflict
with or violate the certificate of incorporation or by-laws or equivalent
organizational documents of the Company or any Company Subsidiary, (ii) subject
to the making of the filings and obtaining the approvals identified in Section
3.4(b), conflict with or violate any law, rule, regulation, order, judgment or
decree (collectively, "Laws") applicable to the Company or any Company
Subsidiary or by which any property or asset of the Company or any Company
Subsidiary is bound or affected, except in such instances which would not have a
Company Material Adverse Effect; or (iii) subject to the making of the filings
and obtaining the approvals identified in Section 3.4(b), conflict with or
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, result in the loss (by
the Company, any such Company Subsidiary or the Surviving Corporation) or
modification in a manner materially adverse to the Company and the Company
Subsidiaries of any material right or benefit under, or give to others any right
of termination, amendment, acceleration, repurchase or repayment, increased
payments or cancellation of, or result in the creation of any security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on voting rights, charges and other encumbrances of any nature
whatsoever (collectively, "Liens") on any property or asset of the Company or
any Company Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, or other instrument or
obligation (collectively, "Contracts"), to which the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary or any
property or asset of the Company or any Company Subsidiary is bound or affected,
except in such instances which would not result in a Company Material Adverse
Effect.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of its obligations under this Agreement and the
consummation of the Transactions by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
federal, state or local governmental or regulatory agency, authority, commission
or instrumentality, whether domestic or foreign (each a "Governmental Entity"),
except for (A) applicable requirements of the Exchange Act, the Securities Act
of 1933, as amended (the "Securities Act"), and state securities or "blue sky"
laws (the "Blue Sky Laws"), (B) the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), (C) approval of the transactions
contemplated by the Transfer Agreement (as defined in Section 6.2(b) hereof) by
the Federal Communications Commission (the "FCC") under the Communications Act
of 1934, as amended (the "Communications Act"), and the rules and regulations of
the FCC promulgated thereunder (the "FCC Rules"), (D) the Merger Filing and
(E) such instances in which the failure to obtain such consents, approvals,
authorizations or permits or to make such filings or provide such notice will
not have a material adverse effect on the business, assets, financial or other
condition, or results of operations of the Company or any of the Company's
broadcasting, Actmedia or DIMAC business units (a "Business Unit Material
Adverse Effect").
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(c) Except as set forth in Section 3.4(b) or in Schedule 3.4(c),
there are no consents, authorizations or other approvals from any Person
(including, without limitation, any Person that has entered into any contract,
agreement, arrangement or understanding with the Company) required to permit the
consummation of the Transactions, except for such instances in which the failure
to obtain such consent, authorization or other approval will not result in a
Business Unit Material Adverse Effect.
Section 3.5 SEC REPORTS AND FINANCIAL STATEMENTS. Each form, report,
schedule, registration statement and definitive proxy statement filed by the
Company with the Securities and Exchange Commission (the "SEC") since December
31, 1994 and prior to the date hereof, including, without limitation, the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 (as
such documents have been amended prior to the date hereof, collectively, the
"Company SEC Reports"), as of their respective dates, complied in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act and the rules and regulations thereunder. None of the Company SEC Reports,
as of their respective dates, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except for such statements, if any, as have been
modified or superseded by subsequent filings prior to the date hereof. The
consolidated financial statements of the Company and the Company Subsidiaries
included in such reports comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of the unaudited interim financial statements, as permitted by
Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited
interim financial statements, to normal, year-end audit adjustments) the
consolidated financial position of the Company and the Company Subsidiaries as
at the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended. Except as set forth in Schedule 3.5, since
December 31, 1996, neither the Company nor any of the Company Subsidiaries has
incurred any liabilities or obligations (whether absolute, accrued, fixed,
contingent, liquidated, unliquidated or otherwise and whether due or to become
due) of any nature, except liabilities, obligations or contingencies (a) which
are reflected on the audited balance sheet of the Company and the Company
Subsidiaries as at December 31, 1996, (including the notes thereto) (the
"Company Balance Sheet"), (b) which (i) were incurred in the ordinary course of
business after December 31, 1996 and consistent with past practices, (ii) are
disclosed in the Company SEC Reports filed after December 31, 1996 or
(iii) would not, individually or in the aggregate, have a Company Material
Adverse Effect. Since December 31, 1996, there has been no change in any of the
significant accounting (including tax accounting) policies, practices or
procedures of the Company or any Company Subsidiary.
Section 3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except (a) as set
forth in Schedule 3.6, (b) as contemplated by this Agreement, (c) as disclosed
in any Company SEC Report, since December 31, 1996, or (d) due to general
economic changes after the date hereof or changes in the Company's business
after the date hereof attributable solely to action taken by News Corp., (i) the
Company and the Company Subsidiaries have conducted their respective businesses
in the ordinary course, consistent with past practice, and have not taken any of
the actions set forth in Section 5.1 hereof and (ii) there has not occurred or
arisen any event that, individually or in the aggregate, has
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had or, insofar as reasonably can be foreseen, is likely in the future to have,
a Company Material Adverse Effect other than events or developments generally
affecting the industry in which the Company and the Company Subsidiaries
operate.
Section 3.7 PROPERTIES. Schedule 3.7 lists and describes briefly (i) all
real property that the Company and the Company Subsidiaries own and (ii) all
real property leased to the Company or any of the Company Subsidiaries, the
location, the rent and the expiration dates, if any, under such leases. The
Company has good and marketable title to, or a valid leasehold or license
interest in, all tangible properties and assets (real, personal and mixed)
reflected on the Company Balance Sheet or acquired after the date thereof
(except for properties and assets sold or otherwise disposed of in the ordinary
course of business since the date of the Company Balance Sheet) necessary for
the present or proposed conduct of its business, free and clear of any and all
Liens, subject only to (i) statutory Liens arising or incurred in the ordinary
course of business with respect to which the underlying obligations are not
delinquent, (ii) Liens reflected on the Company Balance Sheet or notes thereto,
(iii) Liens for taxes, assessments or other governmental charges or levies which
are not yet due and payable or which are being contested in good faith in
appropriate proceedings and as to which adequate reserves have been set aside,
and (iv) Liens which are not substantial in character, amount, or extent, and
which do not materially detract from the value, or interfere with the present
use, of the property subject thereto or affect thereby. The Company and each
Company Subsidiary has a valid leasehold interest under each such lease, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and there is no
default under any such lease or, to the Company's Knowledge (as defined in
Section 3.17 hereof), by any other party thereto, and no event has occurred that
with the lapse of time or the giving of notice or both would constitute a
default thereunder, except for defaults that are not likely to result in a
Business Unit Material Adverse Effect. The Company has heretofore delivered or
agreed to make available to News Corp. copies of all of the material written
leases and licenses described on Schedule 3.7, together with all amendments
thereto. Schedule 3.7 also sets forth those leases or licenses for which
third-party consents as a result of the Transactions are required.
Section 3.8 INTELLECTUAL PROPERTY. The Company and the Company
Subsidiaries own or have valid, binding and enforceable rights to use in North
America all material patents, trademarks, trade names, service marks, service
names, copyrights, applications therefor and licenses or other rights in respect
thereof ("Intellectual Property") used or held for use in connection with the
business of the Company or the Company Subsidiaries, without any known conflict
with the rights of others, except for such conflicts as do not have a Company
Material Adverse Effect. Schedule 3.8 or the Company SEC Reports set forth
(i) each material patent or registration which has been issued to the Company or
any of the Company Subsidiaries with respect to any of their Intellectual
Property, (ii) each material pending patent application or application for
registration which the Company or any of the Company Subsidiaries has made with
respect to any of their Intellectual Property, (iii) each material license,
agreement or other permission which the Company or any of the Company
Subsidiaries has granted to any third party with respect to any of its
Intellectual Property and (iv) each material item of Intellectual Property that
any third party owns and that the Company or any of the Company Subsidiaries
uses pursuant to license, sublicense, agreement or permission. Neither the
Company nor any of the Company Subsidiaries has received any notice from any
other person
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pertaining to or challenging the right of the Company or any of the Company
subsidiaries to use any material Intellectual Property or any material trade
secrets, proprietary information, inventions, know-how, processes and procedures
owned or used or licensed to the Company or the Company Subsidiaries.
Section 3.9 MATERIAL CONTRACTS. The Company has furnished or agreed to
make available to News Corp. accurate and complete copies of the Material
Contracts (as defined below) of the Company and the Company Subsidiaries, all of
which are listed on Schedule 3.9. There is not under any of the Material
Contracts any existing breach, default or event of default by the Company or any
of the Company Subsidiaries, nor event that with notice or lapse of time or both
would constitute a breach, default or event of default by the Company or any of
the Company Subsidiaries other than breaches, defaults or events of default
which would not have a Business Unit Material Adverse Effect; nor does the
Company have Knowledge of, and the Company has not received notice of, or made a
claim with respect to, any breach or default by any other party thereto. As used
herein, the term "Material Contracts" shall mean (i) all contracts and
agreements filed, or required to be filed, as exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996; (ii) all contracts and
agreements entered into since December 31, 1996 which would be required to be
filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ending March 31, 1997 or to any Current Report on Form 8-K; (iii) any
debt instrument, including, without limitation, any loan agreement, promissory
note, security agreement or other evidence of indebtedness, where the Company or
any Company Subsidiary is a lender or borrower; (iv) any contract or commitment
restricting the Company or any Company Subsidiary from engagement in any line of
business; (v) any in-store agreement with a retailer; (vi) any agreement with a
manufacturer with a term in excess of twelve months; (vii) any material joint
venture agreement; (viii) any agreement providing for contingent consideration;
and (ix) any agreement, option, commitment or rights with, to or in any third
party to acquire or to sell a material business division or unit after the date
hereof.
Section 3.10 INSURANCE. Schedule 3.10 contains a description of all
policies or binders of insurance held by or on behalf of the Company or any
Company Subsidiary or insuring any of its employees, properties or assets
(specifying the insurer, the amount of the coverage, the type of insurance, the
risks insured, the expiration date, the policy number, the premium and any agent
or broker). All such policies are in full force and effect and neither the
Company nor any Company Subsidiary is in default of any provision thereof,
except in such instances which would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect.
Section 3.11 LITIGATION. Except as set forth in Schedule 3.11, as of the
date hereof: (i) there are no actions, suits, arbitrations, legal or
administrative proceedings or investigations ("Legal Proceedings") pending or,
to the Company's Knowledge, threatened against the Company or any of the Company
Subsidiaries; and (ii) neither the Company's nor the Company Subsidiaries'
assets, properties or business are subject to any judgment, writ, injunction or
decree of any court, governmental agency or arbitration tribunal.
Section 3.12 COMPLIANCE WITH LAWS. The Company and each Company
Subsidiary are in material compliance with all federal, state local or foreign
law (including common law), statute, code, ordinance, rule regulation or other
requirement applicable to the Company and its Subsidiaries or to
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the conduct of the business or operations of the Company and its Subsidiaries or
the use of their respective properties (including any leased properties) and
assets, except in such instances which would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect. The
Company and each Company Subsidiary has all material governmental permits and
approvals from state, federal or local authorities which are required for the
Company to operate its business, except in such instances which would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect.
Section 3.13 TAX MATTERS.
(a) For purposes of this Agreement, the following terms shall have
the following meanings:
(i) "Tax" means any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative, or add-on minimum, estimated or other tax of any kind whatsoever,
however denominated, including any interest, penalty, or addition thereto,
whether disputed or not.
(ii) "Tax Return" means any return, declaration, report,
claim for refund or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
(b) Except as set forth in the Company Balance Sheet (including the
notes thereto): Each of the Company and the Company Subsidiaries has filed all
Tax Returns required to be filed by it or requests for extensions to file such
Tax Returns have been timely filed, granted and have not expired, except to the
extent that such failures to file or to have extensions granted that remain in
effect individually or in the aggregate would not have a Company Material
Adverse Effect. All Tax Returns filed by the Company and each Company Subsidiary
are complete and accurate except to the extent that such failure to be complete
and accurate would not have a Company Material Adverse Effect. The Company and
each Company Subsidiary have paid (or the Company has paid on the Subsidiary's
behalf) all Taxes shown as due on such Tax Returns, and the Company Balance
Sheet reflects an adequate reserve, in accordance with generally accepted
accounting principles, consistently applied, for all Taxes payable by the
Company and the Company Subsidiaries for all taxable periods and portions
thereof accrued through the date of the Company Balance Sheet.
(c) Except as set forth in the Company Balance Sheet (including the
notes thereto), no deficiencies for any Taxes have been proposed, asserted or
assessed against the Company or any Company Subsidiary that are not adequately
reserved for, except for deficiencies that individually or in the aggregate
would not have a Company Material Adverse Effect, and no requests for waivers of
the time to assess any such Taxes have been granted or are pending.
(d) The Company and each Company Subsidiary have withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee,
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independent contractor, creditor, stockholder, or other third party, except for
such Taxes that individually or in the aggregate would not have a Company
Material Adverse Effect, and complied with all information reporting and backup
withholding requirements, except to the extent that failure to comply with such
requirements would not have a Company Material Adverse Effect.
(e) Schedule 3.13(e) lists all federal, state, local, and foreign
income Tax Returns filed with respect to the Company and each Company Subsidiary
for taxable periods ended on or after December 31, 1993, indicates those Tax
Returns that have been audited and indicates those Tax Returns that currently
are the subject of audit.
(f) None of the Company or any Company Subsidiary has made any
payments or is obligated to make any payments or is a party to any agreement
(including this Agreement) that could obligate it to make any payments that
will not be deductible under Section 280G of the Code, except to the extent that
the nondeductibility of such payment would not have a Company Material Adverse
Effect.
(g) Except as set forth in Schedule 3.13(g), none of the Company or
any Company Subsidiary (i) has been a member of any group of entities (other
than a group of which the Company is the common parent) filing a consolidated
federal income Tax Return or similar combined state, local or foreign Tax Return
or (ii) has any liability for the Taxes of any person (other than the Company or
any Company Subsidiary) under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise, except for liabilities that individually or in the
aggregate would not have a Company Material Adverse Effect.
Section 3.14 EMPLOYEE BENEFIT PLANS.
(a) Each employee benefit plan, as such term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), to which the Company or the Company Subsidiaries contribute or had
contributed to or which the Company or the Company Subsidiaries maintain or have
maintained (collectively, the "Employee Plans") complies in all material
respects with all applicable requirements of ERISA, the Code and other
applicable laws and have been administered in accordance with their terms.
Except as set forth on Schedule 3.14, none of the Employee Plans is an employee
pension benefit plan or a multiemployer plan, as such terms are defined in
ERISA, and other than the Saint Louis Lithographers Pension Fund, none of the
Employee Plans are defined benefit plans. None of the Company, any Company
Subsidiary or any of their respective directors, officers, employees or agents
has, with respect to any Employee Plan, engaged in any "prohibited transaction,"
as such term is defined in the Code or ERISA, nor has any Employee Plan engaged
in such prohibited transaction which could result in any taxes or penalties or
other prohibited transactions, which in the aggregate could have a Company
Material Adverse Effect.
(b) Schedule 3.14 contains a list of (i) all material employee
benefit plans, as such term is defined in Section 3(3) of ERISA, (ii) all other
material employment, severance or other similar contracts, arrangements or
policies and (iii) each other plan or arrangement (written or oral) providing
for insurance coverage (including self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits or for deferred compensation, profit sharing, bonuses, forms of
incentive compensation or post-retirement insurance,
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compensation or benefits which is not an employee benefit plan (as heretofore
defined) which the Company has maintained, contributed to, or in connection with
which it has or has had any liability, regardless of whether such employee
benefit plan, fund or program (x) is or is intended to be covered or qualified
under the Code, ERISA or any other applicable law, (y) is or is intended to be
funded or unfunded, or (z) covers any current or former employee of or
independent contractor to the Company or the Company Subsidiaries ("Benefit
Plans").
(c) There is no action, audit, suit or claim pending or threatened in
writing relating to any Benefit Plan, fiduciary of any such Plan or assets of
any such Plan, before any court, tribunal or government agency, except for any
action, audit, suit or claim which, individually or in the aggregate, would not
result in a Company Material Adverse Effect.
(d) In the case of any policies or binders of insurance that
constitute or are otherwise maintained in connection with a Benefit Plan, to the
Company's Knowledge (i) such policies and binders are valid and enforceable in
accordance with their terms in all material respects, and are in full force and
effect; (ii) neither the Company nor any Company Subsidiary is in default in
any material respect with respect to any material provisions contained in any
such policy or binder and has not materially failed to give any notice or
present any claim under any such policy or binder in a due and timely fashion;
and (iii) neither the Company nor any Company Subsidiary has received any notice
of cancellation or non-renewal of any such policy or binder which could have in
the aggregate a Company Material Adverse Effect.
Section 3.15 EMPLOYEE MATTERS. Schedule 3.15 sets forth a list, by
employee, of the severance obligations of the Company and the Company
Subsidiaries. Other than those set forth on Schedule 3.15 and the severance
plans for Actmedia, Inc. and DIMAC Corporation, neither the Company nor any of
the Company Subsidiaries has any severance obligations (other than immaterial
severance obligations). Except as set forth on Schedule 3.15, the Company is not
bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment, or
arrangement with any labor union, and no labor union has requested to the
Company or, to the Knowledge of the Company, has sought to represent any of the
employees of the Company. There is no strike or other labor dispute involving
the Company or any Company Subsidiary pending, or, to the Knowledge of the
Company, threatened, which could have an adverse effect on the assets,
properties, financial condition, operating results, or business of the Company
(as such business is presently conducted and as it is proposed to be conducted),
nor is the Company aware of any labor organization activity involving its
employees. Except as set forth on Schedule 3.15, there is no arbitration,
grievance or administrative proceeding relating to labor-management relations
and/or employee relations that is pending against the Company or any Company
Subsidiary or, to the Knowledge of the Company, threatened, which is reasonably
likely to result in a Company Material Adverse Effect.
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Section 3.16 ENVIRONMENTAL LAWS.
(a) Each of the Company and the Company Subsidiaries (and, to the
Company's Knowledge, any of their respective predecessors) has complied with all
laws (including rules and regulations thereunder) of federal, state, local and
foreign governments (and all agencies thereof) concerning the environment,
public health and safety, and employee health and safety, and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand or
notice has been filed or commenced against any of them alleging any failure to
comply with any such law or regulation, except where the failure to comply would
not, in the aggregate, result in a Company Material Adverse Effect.
(b) The Company and each Company Subsidiary have obtained all
permits, licenses and other authorizations which are required with respect to
the operation of its business under Federal, state, local and foreign laws
relating to (i) public health and safety or worker health and safety ("Health
and Safety Laws") or (ii) pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, chemicals,
or industrial toxic or hazardous substances or wastes (the "Environmental
Laws"), except where the failure to obtain such permits, licenses or
authorizations would not in the aggregate result in a Company Material Adverse
Effect.
(c) Neither the Company nor any Company Subsidiary has received any
notice that it is not in compliance with any other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws or the Health and Safety Laws or
contained in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder.
(d) There is no civil, criminal or administrative action, suit,
demand, claim, hearing notice or demand letter pending against the Company or
any Company Subsidiary relating in any way to the Environmental Laws or the
Health and Safety Laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except in such instances which would not in the aggregate result in
a Business Unit Material Adverse Effect.
Section 3.17 KNOWLEDGE. "Knowledge," as it applies to the Company, shall
refer to the actual knowledge which the chief executive officers, the chief
operating officers (other than station managers), the general counsel and the
chief financial officers of the Company and the Company Subsidiaries have after
due inquiry.
Section 3.18 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. The
information supplied or to be supplied by the Company, any Company Subsidiary or
their respective Representatives (as defined in Section 6.3) for inclusion in
(a) the Registration Statement (as defined in Section 6.9) will not, either at
the time the Registration Statement is filed with the SEC, at the time any
amendment thereof or supplement thereto is filed with the SEC, at the time it
becomes effective
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under the Securities Act or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (b) the
Proxy Statement/Prospectus (as defined in Section 6.9), including any amendments
and supplements thereto, will not, either at the date mailed to the Company's
stockholders or at the time of the Company Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Proxy
Statement/Prospectus, as to information supplied by the Company, any Company
Subsidiary or their respective Representatives, will comply in all material
respects with all applicable provisions of the Securities Act and the Exchange
Act and the rules and regulations promulgated thereunder.
Section 3.19 OPINION OF FINANCIAL ADVISOR. The Company's Board of
Directors received the written opinion of Donaldson, Lufkin & Jenrette
Securities Corporation, dated March 16, 1997 (a copy of which has heretofore
been delivered to News Corp.), to the effect that, as of such date, the Exchange
Ratio is fair to the stockholders of the Company.
Section 3.20 BROKERS. No broker, finder or investment banker (other than
Donaldson, Lufkin & Jenrette Securities Corporation) is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWS CORP.
News Corp. hereby represents and warrants to the Company that:
Section 4.1 ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES. Each of News
Corp. and Merger Sub is a corporation, partnership or other legal entity duly
incorporated or organized, validly existing and, if applicable, in good standing
under the laws of the jurisdiction of its incorporation or organization and has
the requisite power and authority and all governmental permits, approvals and
other authorizations necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing or, if applicable, in good standing or to have such
power, authority and governmental permits, approvals and other authorizations
would not, individually or in the aggregate, have a material adverse effect on
the business, assets, financial or other condition, or results of operations of
News Corp. and the Subsidiaries of News Corp., taken as a whole (a "News Corp.
Material Adverse Effect").
Section 4.2 VALIDITY OF NEWS CORP. PREFERRED STOCK AND NEWS CORP.
PREFERRED ADRS. The News Corp. Preferred ADRs to be issued in the Merger will be
issued by the Depositary under the terms of the Deposit Agreement. All of the
shares of News Corp. Preferred Stock underlying the News Corp. Preferred ADRs to
be issued in the Merger, when deposited with the Custodian in accordance with
Section 2.2(a) and the terms of the Deposit Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all Liens.
Upon the due issuance by the Depositary of News Corp. Preferred ADRs evidencing
News Corp. Preferred Stock against the deposit of the News Corp. Preferred Stock
in accordance with the terms of the Deposit Agreement, the News Corp. Preferred
ADRs to be issued in the Merger will be duly and validly issued and
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persons in whose names the News Corp. Preferred ADRs are registered will be
entitled to the rights of registered holders of News Corp. Preferred ADRs
specified therein and in the Deposit Agreement, and the News Corp. Preferred
ADRs will conform in all material respects to the description of the News Corp.
Preferred ADRs contained in the Proxy Statement/Prospectus. The Deposit
Agreement has been duly and validly authorized by all necessary corporate action
of News Corp., has been duly and validly executed and delivered by News Corp.,
and, assuming the due authorization, execution and delivery thereof by the
Depositary, constitutes the legal, valid and binding obligation of News Corp.,
enforceable against News Corp. in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and by equitable principles
to which the remedies of specific performance and injunctive and similar forms
of relief are subject.
Section 4.3 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) Each of News Corp. and Merger Sub has all necessary corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Transactions.
(b) The execution and delivery of this Agreement by News Corp. and
Merger Sub and the consummation by News Corp. and Merger Sub of the Transactions
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of News Corp. or Merger Sub are
necessary to authorize this Agreement or to consummate the Transactions (other
than the Merger Filing). This Agreement has been duly and validly executed and
delivered by News Corp. and Merger Sub and, assuming the due authorization,
execution and delivery thereof by the Company, constitutes the legal, valid and
binding obligation of each of News Corp. and Merger Sub, enforceable against
News Corp. and Merger Sub in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights generally and by equitable principles to which the
remedies of specific performance and injunctive and similar forms of relief are
subject and except that rights to indemnity hereunder may be subject to federal
or state securities laws or the policies underlying such laws.
Section 4.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by News Corp. and
Merger Sub do not, and the performance of their respective obligations under
this Agreement and the consummation of the Transactions by News Corp. and Merger
Sub will not, (i) conflict with or violate the articles of incorporation or
by-laws or equivalent organizational documents of News Corp. or Merger Sub, (ii)
subject to making the filings and obtaining the approvals identified in Section
4.4(b), conflict with or violate any Law applicable to News Corp. or Merger Sub
or by which any property or asset of News Corp. or Merger Sub is bound or
affected, except in such instances which would not result in a News Corp.
Material Adverse Effect, or (iii) subject to making the filings and obtaining
the approvals identified in Section 4.4(b), conflict with or result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss (by News Corp. or
Merger Sub) or modification in a manner materially adverse to News Corp. or
Merger Sub of a material right or benefit under, or give to others any right of
termination, amendment, acceleration, repurchase or repayment, increased
payments or
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cancellation of, or result in the creation of any Liens on any property or asset
of News Corp. or Merger Sub pursuant to, any Contract to which News Corp. or
Merger Sub is a party or by which News Corp. or Merger Sub or any property or
asset of News Corp. or Merger Sub is bound or affected, except in such instances
which would not result in a News Corp. Material Adverse Effect.
(b) Except as set forth in Schedule 4.4(b), the execution and
delivery of this Agreement by News Corp. and Merger Sub do not, and the
performance of their respective obligations under this Agreement and the
consummation of the Transactions by News Corp. and Merger Sub will not, require
any consent, approval, waiver, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) for (A) applicable
requirements, if any, of the Exchange Act, the Securities Act or the Blue Sky
Laws, (B) the pre-merger notification requirements of the HSR Act, (C) the
approval of the transactions contemplated by the Transfer Agreement by the FCC
under the Communications Act and the FCC Rules, (D) the Merger Filing, (E) the
filing of listing applications and the filing of an application for quotation
with the stock exchanges on which the News Corp. Preferred Stock and the News
Corp. Preferred ADRs are listed or quoted and (F) a waiver from the ASX (which
will require the approval of the shareholders of News Corp. at the next general
meeting of shareholders) with respect to the Listing Rules requiring voting
rights for preferred shares at any time that dividends are in arrears (the "ASX
Waiver"), and (ii) where the failure to obtain such consents, approvals,
waivers, authorizations or permits, or to make such filings or notifications,
would not, individually or in the aggregate, prevent or delay in any material
respect consummation of the Transactions, or otherwise prevent News Corp. or
Merger Sub from performing its respective obligations under this Agreement in
any material respect, or would not, individually or in the aggregate, have a
News Corp. Material Adverse Effect.
Section 4.5 SEC REPORTS AND FINANCIAL STATEMENTS. Each form, report,
schedule and registration statement filed by News Corp. with the SEC since
December 31, 1994 and prior to the date hereof (as such documents have been
amended prior to the date hereof, the "News Corp. SEC Reports"), as of their
respective dates, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations thereunder. None of the News Corp. SEC Reports, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except for such statements, if any, as have been modified
or superseded by subsequent filings prior to the date hereof. The consolidated
financial statements of News Corp. and the News Corp. Subsidiaries included in
such reports have been prepared in accordance with Australian generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and give a true and
fair view (subject, in the case of the unaudited interim financial statements,
to normal, year-end audit adjustments) of the consolidated financial position of
News Corp. and the News Corp. Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended, and such financial statements and the reconciliations to United States
generally accepted accounting principles comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. Since December 31, 1996,
neither News Corp. nor any of the News Corp. Subsidiaries has incurred any
liabilities or obligations (whether absolute, accrued, fixed, contingent,
liquidated, unliquidated or otherwise and whether due or to become due) of any
nature, except liabilities, obligations or contingencies (a) which are reflected
on the unaudited
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balance sheet of News Corp. and the News Corp. Subsidiaries as at December 31,
1996 (including the notes thereto), or (b) which (i) were incurred in the
ordinary course of business after December 31, 1996 and consistent with past
practices, (ii) are disclosed in the News Corp. SEC Reports filed after December
31, 1996 or (iii) would not, individually or in the aggregate, have a News Corp.
Material Adverse Effect. Since December 31, 1996 there has been no change in any
of the significant accounting (including tax accounting) policies, practices or
procedures of News Corp.
Section 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated
by this Agreement or as disclosed in any News Corp. SEC Report, since December
31, 1996 (a) News Corp. has conducted its business in the ordinary course,
consistent with past practice, and has not taken any of the actions set forth in
Section 5.2 hereof, and (b) there has not occurred or arisen any event that,
individually or in the aggregate, has had or, insofar as reasonably can be
foreseen, is likely in the future to have, a News Corp. Material Adverse Effect,
other than events or developments generally affecting the industry in which News
Corp. and the News Corp. Subsidiaries operate.
Section 4.7 LITIGATION. Except as set forth in Schedule 4.7, there are
no Legal Proceedings pending or, to News Corp.'s knowledge, threatened against
News Corp. or any of the News Corp. Subsidiaries, which could reasonably be
expected to have, individually or in the aggregate, a News Corp. Material
Adverse Effect, or to prohibit or materially restrict the consummation of the
Transactions, nor is there any judgment, decree, order, injunction, writ or rule
of any court, governmental department, commission, agency, instrumentality or
authority or any arbitrator outstanding against News Corp. or any News Corp.
Subsidiary having, or which, insofar as can be reasonably foreseen, in the
future is reasonably likely to have, any such News Corp. Material Adverse
Effect.
Section 4.8 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. The
information supplied or to be supplied by News Corp., any News Corp. Subsidiary
or their respective Representatives for inclusion in (a) the Registration
Statement will not, either at the time the Registration Statement is filed with
the SEC, at the time any amendment thereof or supplement thereto is filed with
the SEC, at the time it becomes effective under the Securities Act or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and (b) the Proxy Statement/Prospectus,
including any amendments and supplements thereto, will not, either at the date
mailed to the Company's stockholders or at the time of the Company Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The Proxy Statement/Prospectus, as to information supplied by News Corp., any
News Corp. Subsidiary or their respective Representatives, will comply as to
form in all material respects with all applicable provisions of the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder,
and the Registration Statement, other than as to information supplied by the
Company, any Company Subsidiary or their respective Representatives, will comply
in all material respects with the provisions of the Securities Act and the rules
and regulations promulgated thereunder.
Section 4.9 FINANCING. News Corp. has adequate funds to, and to the
extent required at the Effective Time will, satisfy the obligations of the
Company which become due as a result of the
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consummation of the Merger, including the indebtedness of the Company
accelerated as a result thereof and the expenses of the Company incurred in
connection with, and payable upon the consummation of, the Merger.
Section 4.10 CAPITALIZATION. The authorized capital stock of News Corp.
consists of 5,000,000,000 shares of A$.50 each, of which, as of January 31,
1997, 1,944,153,391 were designated as Ordinary Shares, par value A$.50 each
(the "News Corp. Ordinary Shares"), and were issued and outstanding;
1,510,206,602 were designated as News Corp. Preferred Stock, and were issued and
outstanding; 25,000,000 were designated as 6.25% Convertible Preference Shares,
par value A$.50 each (the "News Corp. Convertible Stock"), and were issued and
outstanding; 3,800,000 were designated as Cumulative Perpetual Preference
Shares, par value U.S.$25.00, and were issued and outstanding; 68.8 were
designated as 5.147% Subsidiary Preference Shares (represented by 209,708,738
News Corp. Ordinary Shares), and were issued and outstanding; and 10,000,000
were designated as 8-5/8% Guaranteed Perpetual Preference Shares, par value
U.S.$25.00, and were issued and outstanding. All of such shares were validly
issued, fully paid and nonassessable.
Section 4.11 BROKERS. No broker, finder or investment banker (other than
Merrill, Lynch & Co.) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of News Corp. or Merger Sub.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 CONDUCT OF BUSINESS OF THE COMPANY PENDING THE MERGER. The
Company covenants and agrees that, except as expressly permitted or contemplated
by this Agreement and except as set forth on Schedule 5.1, until the Effective
Time, unless News Corp. shall otherwise agree in writing prior to the taking of
any action otherwise prohibited by the terms of this Section 5.1, the Company
shall, and shall cause each Company Subsidiary to, conduct its operations and
business in the ordinary and usual course of business and consistent with past
practice and use reasonable efforts to preserve intact its business
organizations' goodwill, keep available the services of its present officers and
key employees, and preserve the goodwill and business relationships with
suppliers, distributors, customers and others having business relationships with
it, unless the Company's failure to do so is solely the result of actions taken
by News Corp. after the date hereof. Without limiting the generality of the
foregoing, and except as otherwise expressly permitted by this Agreement or as
set forth in this Section 5.1 or Schedule 5.1, prior to the Effective Time,
without the prior written consent of News Corp., the Company will not, and will
cause each Company Subsidiary not to:
(a) amend or otherwise change its Certificate of Incorporation or
By-Laws (other than immaterial By-Law amendments which will not interfere with
or delay consummation of the Transactions);
(b) issue or authorize the issuance of, sell, pledge or otherwise
dispose of, grant or otherwise create any additional shares of, or any options
to acquire any shares of, its capital stock or any debt or equity securities
convertible into or exchangeable for such capital stock, other than (i)
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any such issuance pursuant to the exercise of outstanding Company Stock Options,
or upon the conversion of outstanding convertible securities, in each case in
accordance with their respective terms as in effect on the date hereof, or (ii)
the issuance of shares of capital stock of a Company Subsidiary to the Company
or any wholly-owned Company Subsidiary;
(c) purchase, redeem or otherwise acquire or retire, or offer to
purchase, redeem or otherwise acquire or retire, any shares of its capital
stock, other than in transactions between the Company and its wholly-owned
Subsidiaries and required repurchases of options or stock upon termination of
employment to the extent required by agreements in effect on the date hereof;
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, except dividends declared and paid by a Company Subsidiary
only to the Company or a wholly-owned Company Subsidiary;
(e) incur or become contingently liable with respect to any
Indebtedness or guarantee any such Indebtedness or issue any debt securities.
For purposes of this Section 5.1(e), "Indebtedness" shall mean and include (i)
indebtedness of the Company or any Company Subsidiary for borrowed money whether
short-term or long-term and whether secured or unsecured, (ii) indebtedness of
the Company or any Company Subsidiary for the deferred purchase price of
services or property, which purchase price (A) is due twelve months or more from
the date of incurrence of the obligation in respect thereof or (B) customarily
or actually is evidenced by a note or other written instrument (including,
without limitation, any such indebtedness which is non-recourse to the credit of
the Company or any Company Subsidiary but is secured by the assets of the
Company or any Company Subsidiary), (iii) obligations of the Company or any
Company Subsidiary under capitalized leases, (iv) obligations arising under
acceptance facilities, (v) all obligations of the Company or any Company
Subsidiary evidenced by bonds, debentures, notes or other similar instruments,
(vi) all obligations of the Company or any Company Subsidiaries upon which
interest charges are customarily paid, (vii) all obligations of the Company or
any Company Subsidiaries under conditional sale or other title retention
agreements relating to property purchased by the Company or any Company
Subsidiary (even though the rights and remedies of the seller or lender under
such arrangement in the event of default are limited to repossession or sale of
such property), (viii) obligations of the Company to repurchase, redeem, retire,
defease or otherwise acquire for value any of its capital stock or any warrants,
rights or options to acquire such capital stock (with redeemable preferred stock
being valued at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends), (ix) the unpaid reimbursement
obligations in respect of all letters of credit issued for the account of the
Company or any Company Subsidiary (other than letters of credit issued by or on
behalf of the Company or any Company Subsidiary in connection with a contest or
similar promotion of a broadcast television station of such Company Subsidiary),
(x) guarantees of Indebtedness of others by the Company or any Company
Subsidiary, and (xi) renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any such indebtedness, guarantee
or obligation; PROVIDED, HOWEVER, that the accrual of interest on Indebtedness
issued with original interest discount shall not be deemed to be an incurrence
of Indebtedness;
(f) merge, consolidate with or consummate any other business
combination with any person or acquire or agree to acquire by merging or
consolidating with, or by purchasing a
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substantial equity interest in or a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business entity;
(g) dispose of a portion of the Company's assets in a transaction
outside the ordinary course of business;
(h) except as may be required by applicable Law or by contracts
existing as of the date hereof, or as contemplated by this Agreement, (i)
increase the compensation payable or to become payable to its officers or
employees, except in the ordinary course of business consistent with past
practice and except as set forth in Schedule 5.1; (ii) enter into any agreement
with an officer or employee subject to the excise tax imposed by Section 4999 of
the Code on excess parachute payments as defined by Section 280G of the Code to
"gross up" such employee for any such excise tax; (iii) enter into any
employment agreement with any executive officer of the Company or, except in the
ordinary course of business consistent with past practice, with any other
employee; (iv) grant any severance or termination pay to any director, officer
or employee of the Company or any Company Subsidiary, except in the ordinary
course of business consistent with past practice or pursuant to existing Company
Benefit Plans; (v) enter into any severance agreement with any director, officer
or employee except in the ordinary course of business consistent with past
practice; or (vi) establish, adopt, enter into, terminate, withdraw from or
amend in any material respect or take action to accelerate any rights or
benefits under any collective bargaining agreement, any stock option plan, or
any employee benefit plan or policy;
(i) take, or permit any affiliate to take, any other action that is
reasonably intended to delay, or adversely impact, the approval by any
Governmental Entity of the Transactions;
(j) mortgage, pledge or subject to any Lien any assets, or acquire
any assets or sell, assign, transfer, convey, lese or otherwise dispose of any
assets of the Company or any Company Subsidiary, except for assets acquired or
sold, assigned, transferred, conveyed, leased or otherwise disposed of in the
ordinary course of business consistent with past practice;
(k) discharge or satisfy any Lien, or pay any obligation or liability
(fixed or contingent), except in the ordinary course of business consistent with
past practice;
(l) cancel or compromise any debt or claim or amend, cancel,
terminate, relinquish, waive or release any contract or right except in the
ordinary course of business consistent with past practice;
(m) settle any Legal Proceedings requiring aggregate settlement
payments in excess of $250,000;
(n) incur payment obligations to any affiliate of the Company (other
than a Company Subsidiary); PROVIDED, HOWEVER, that compensation payments in the
ordinary course of business to the executives and other officers of the Company
and its Subsidiaries shall not be subject to the provisions of this clause (n);
or
(o) authorize any of, or commit or agree to take any of, the
foregoing actions.
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Section 5.2 CONDUCT OF BUSINESS BY NEWS CORP. PENDING THE MERGER. From
the date hereof to the Effective Time, News Corp. will, except as required in
connection with the Merger and the other Transactions or consented to in writing
by Company:
(a) neither change nor amend the terms of the News Corp. Preferred
ADRs; and
(b) not bid for or purchase News Corp. Preferred ADR's for the thirty
trading days immediately preceding the Effective Time unless such purchases are
required to be made pursuant to any employee benefit plan of News Corp.
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1 GOVERNMENTAL APPROVALS.
(a) As promptly as practicable after the execution of this Agreement,
News Corp. and the Company shall file notification reports under the HSR Act,
shall request early termination of the waiting period under the HSR Act and
shall use their best reasonable efforts to obtain clearance or authorization
under the HSR Act of the Merger and the other Transactions at the earliest
practicable time.
(b) News Corp. and the Company shall cooperate and use their best
reasonable efforts to obtain all required consents, approvals and waivers from
governmental agencies and third parties. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other person is
commenced which questions the validity or legality of the Merger or any of the
other Transactions or seeks damages in connection therewith, the parties agree
to cooperate and use all reasonable efforts to defend against such claim,
action, suit, investigation or other proceeding and, if an injunction or other
order is issued in any action, suit or other proceeding, to use all reasonable
efforts to have such injunction or other order lifted, and to cooperate
reasonably regarding any other impediment to the consummation of the Merger and
the other Transactions.
Section 6.2 SALE OF HMI BROADCASTING CORP.
(a) At the direction and expense of News Corp., at any time following
the termination or expiration of any applicable waiting period under the HSR
Act, the Company shall, or shall cause HMI and/or its Subsidiaries to, enter
into an agreement (the "HMI Sale Agreement") for the sale (the "HMI Sale") to a
third party designated by News Corp. of all outstanding shares or assets of HMI
and its Subsidiaries, whether through merger, consolidation, sale of stock, sale
of assets or otherwise; PROVIDED, HOWEVER, that the HMI Sale Agreement shall (i)
not require the Company to close the transactions contemplated thereby prior to
the Effective Time, (ii) terminate if this Agreement is terminated and (iii) not
contain any provisions which either interfere with the Company's conduct of
broadcast operations prior to the Effective Time or, in the opinion of Company's
Counsel, violate applicable FCC rules and regulations; and PROVIDED, FURTHER,
that, following the transfer pursuant to the Transfer Agreement (as defined in
subsection (b) below), the Trustee (as defined in subsection (b) below) shall,
on behalf of the Company, perform the transactions
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contemplated by the HMI Sale Agreement. The terms and conditions of the HMI Sale
Agreement shall be determined by News Corp. in its sole discretion. Following
the execution of the HMI Sale Agreement, the Company shall submit an application
to the FCC for approval of the HMI Sale Agreement. Upon obtaining FCC approval
of the HMI Sale Agreement, the Company or the Trustee, if applicable, shall
consummate the HMI Sale Agreement in accordance with its terms or otherwise at
the direction of News Corp. The Company hereby represents and warrants to News
Corp. that HMI and its Subsidiaries (i) conduct all of the radio and broadcast
business of the Company and (ii) own or have the right to use all radio and
broadcast licenses used in connection with, related to or necessary for the
operation of the business of HMI and its Subsidiaries.
(b) As soon as practicable following the execution of this Agreement,
the Company shall enter into an agreement (the "Transfer Agreement") providing
for the transfer of title, at or after the Effective Time, of all outstanding
shares of HMI for the benefit of the Company to an independent trustee (the
"Trustee"), to be mutually designated by the Company and News Corp. The Transfer
Agreement will provide for, among other terms and conditions, the
indemnification of the Trustee for losses resulting from any actions taken at
the direction of News Corp., other than losses resulting from the willful
misconduct or gross negligence of the Trustee. Following the execution of the
Transfer Agreement, the Company shall submit an application to the FCC for
approval of the Transfer Agreement. On the Closing Date, the Company shall
transfer title to the shares of HMI in accordance with the terms of the Transfer
Agreement, subject to the terms of the Sale Agreement, if any, then in effect.
Following the consummation of the Transfer Agreement, the Trustee shall conduct
HMI's business in the ordinary and usual manner, consistent with past practice,
and shall use commercially reasonable efforts to maintain the general character
of HMI's business, to preserve its business intact, to keep available to HMI the
services of its present officers and employees and to retain the benefit of its
current broadcasting and radio licenses.
Section 6.3 ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to
applicable law, from the date hereof to the Effective Time, the Company shall
(and shall cause the Company Subsidiaries and officers, directors, employees,
auditors and agents to) afford the officers, employees, auditors and agents (the
"Representatives") of News Corp. access at reasonable times to its officers,
employees, agents, properties, offices, plants and other facilities, books,
records and Tax Returns, and shall furnish such Representatives with all
financial, operating and other data and information as may be reasonably
requested. All files, records, documents, information, data and similar items
relating to the confidential information of the Company and the Company
Subsidiaries, whether furnished pursuant to this Section 6.3 or otherwise in
connection with the Transactions (other than information which (i) is or becomes
generally available to the public other than as a result of a disclosure by the
Company or its Representatives, (ii) is or becomes available to News Corp. from
a source other than the Company, the Company Subsidiaries or their
Representatives; PROVIDED, HOWEVER, that such source is not, and was not, bound
by a confidentiality agreement with the Company or any of its affiliates or
Representatives, or (iii) is reasonably necessary to be disclosed in connection
with any litigation between the parties hereto and/or their respective
Representatives with respect to the subject matter hereof), shall be deemed
"confidential information" of the Company and shall remain the exclusive
property of the Company. Such confidential information has been furnished
solely for the purpose of News Corp.'s evaluating and consummating the Merger,
and, in the event the Merger is not consummated, News Corp. may not, and shall
cause its Representatives to not, otherwise use such information or disclose the
same to third parties. If this Agreement is terminated for any reason
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pursuant to Article VIII hereof, the obligations of News Corp. and its
Representatives pursuant to this Section 6.3 shall terminate two years from the
date hereof. Further, News Corp. shall, and shall cause its respective
Representatives to, promptly deliver all copies of any such confidential
information to the Company upon termination of this Agreement, in accordance
with Article VIII hereof. Notwithstanding anything in the foregoing to the
contrary, News Corp. and its Representatives may use such confidential
information in connection with the HMI Sale; PROVIDED, HOWEVER, that News Corp.
and its Representatives shall not provide such confidential information to any
third party unless such third party agrees to be bound in a writing containing
substantially similar terms to those contained in this Section 6.3 (including,
without limitation, the obligations of News Corp. and its Representatives with
respect to such information).
Section 6.4 ACQUISITION PROPOSALS. None of the Company, any Company
Subsidiary or any of the respective officers and directors of the Company and
the Company Subsidiaries shall, and the Company will use its best efforts to
cause its employees, agents and Representatives (including, without limitation,
any investment banker, attorney or accountant retained by the Company or any of
the Company Subsidiaries) not to, initiate or solicit, directly or indirectly,
any inquiries or the making of any proposal with respect to a merger,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets of, or any equity interest in, the Company or
any of the Company Subsidiaries (an "Acquisition Proposal") or, except to the
extent that, consistent with its fiduciary duties as advised by counsel, the
Board of Directors of the Company determines that it is required to do so,
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to, an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal. The Company will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. The Company will
notify News Corp. promptly in writing if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with the Company.
Section 6.5 FURTHER ACTION; REASONABLE EFFORTS.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use commercially reasonable efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Transactions, including, without limitation,
using commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Entities,
make all filings and required submissions with Governmental Entities, including
foreign filings and submissions, and obtain all consents and approvals from
parties to Contracts with the parties hereto or their respective Subsidiaries as
are necessary for the consummation of the Transactions. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall use their reasonable efforts to take all such
action.
(b) Each party to this Agreement and their respective Subsidiaries
shall use its commercially reasonable efforts not to take any action, or enter
into any transaction, which would
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result in a breach of any representation, warranty, covenant or agreement made
by such party in this Agreement.
Section 6.6 PUBLIC ANNOUNCEMENTS. Each party to this Agreement and their
respective Subsidiaries shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
or any of the Transactions and shall not issue any such press release or make
any such public statement without the prior consent of the other parties to this
Agreement, which consent shall not be unreasonably withheld; PROVIDED, HOWEVER,
that a party may, without the prior consent of the other parties to this
Agreement, issue such press release or make such public statement as may be
required by law or any listing agreement or arrangement to which any such person
is a party with a national securities exchange or if it has used all reasonable
efforts to consult with the other parties to this Agreement and to obtain such
parties' consent but has been unable to do so in a timely manner.
Section 6.7 NOTIFICATION OF CERTAIN MATTERS. News Corp. shall give
prompt notice to the Company, and the Company shall give prompt notice to News
Corp., of (a) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be reasonably likely to cause any representation or
warranty contained in this Agreement to be untrue or any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(b) any failure of News Corp. or the Company, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
this Section 6.7 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 6.8 STOCKHOLDER MEETING. The Company shall call a meeting of its
stockholders (the "Company Meeting") to be held as promptly as practicable for
the purpose of considering and voting upon this Agreement and the Merger. The
Board of Directors of the Company shall, unless otherwise required in accordance
with their fiduciary duties to the stockholders of the Company, recommend that
the stockholders of the Company approve this Agreement and the Merger.
Section 6.9 REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS.
(a) As promptly as practicable after the execution of this Agreement,
(i) the Company and News Corp. shall prepare and file with the SEC a proxy
statement relating to the Company Meeting to be held in connection with the
Transactions (together with any amendments thereof or supplements thereto, the
"Proxy Statement/Prospectus") and (ii) News Corp. shall prepare and file with
the SEC a registration statement (together with all amendments thereto, the
"Registration Statement") in which the Proxy Statement/Prospectus shall be
included as a prospectus, in connection with the registration under the
Securities Act of the News Corp. Preferred ADRs to be issued pursuant to the
Merger. Each of News Corp. and the Company (i) shall cause the Proxy
Statement/Prospectus and the Registration Statement to comply as to form in all
material respects with the applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder, (ii) shall use
commercially reasonable efforts to have or cause the Registration Statement to
become effective as promptly as practicable, and (iii) shall take all or any
action required under any applicable federal or state securities laws in
connection with the issuance of News Corp. Preferred ADRs pursuant to the
Merger. The Company and News Corp. shall furnish to the other all
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information concerning the Company and News Corp. as the other may reasonably
request in connection with the preparation of the documents referred to herein.
As promptly as practicable after the Registration Statement shall have become
effective, the Company shall mail the Proxy Statement/Prospectus to its
respective stockholders.
(b) The information supplied by each of the Company and News Corp.
for inclusion in the Registration Statement and the Proxy Statement/Prospectus
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Proxy Statement/Prospectus (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of the Company, (iii)
the time of the Company Meeting, or (iv) the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to the Company, any Company Subsidiary, News Corp., any
News Corp. Subsidiary, or their respective officers or directors, should be
discovered by such party which should be set forth in an amendment or a
supplement to the Registration Statement or the Proxy Statement/Prospectus, such
party shall promptly inform the other thereof and take appropriate action in
respect thereof.
Section 6.10 BLUE SKY. News Corp. shall use its commercially reasonable
efforts to obtain prior to the Effective Time all approvals or permits required
to carry out the Transactions under applicable Blue Sky Laws in connection with
the issuance of News Corp. Preferred ADRs in the Merger and as contemplated by
this Agreement; PROVIDED, HOWEVER, that with respect to such qualifications
neither News Corp. nor the Company shall be required to register or qualify as a
foreign corporation or to take any action which would subject it to general
service of process or taxation in any jurisdiction where any such entity is not
now so subject. The Company shall cooperate with News Corp. in the making of all
required filings under applicable Blue Sky Laws in connection with the issuance
of News Corp. Preferred ADRs in the Merger.
Section 6.11 NYSE; ASX. News Corp. shall (a) promptly prepare and submit
to the NYSE applications covering the News Corp. Preferred ADRs to be issued
pursuant to the Transactions, and shall use commercially reasonable efforts to
cause such securities to be approved for listing on the NYSE prior to the
Effective Time, subject to official notice of issuance, (b) within ten days
after the Effective Time, prepare and submit to the ASX, pursuant to the Listing
Rules of the ASX, applications covering the News Corp. Preferred Stock
underlying the News Corp. Preferred ADRs issued pursuant to the Transactions to
cause such securities to be approved for quotation by the ASX., and (c) promptly
seek the ASX Waiver or, if the ASX Waiver is not granted, call a special meeting
of shareholders to approve the terms of the News Corp. Preferred Stock required
by the ASX Listing Rules (the "Shareholder Ratification").
Section 6.12 AFFILIATES. At least 10 days prior to the mailing of the
Proxy Statement/Prospectus, (a) the Company shall deliver to News Corp. a letter
identifying all persons who may be deemed to be ease or make any such public
statement without the prior consent of the other parties to this Agreement,
which consent shall not be unreasonably withheld; PROVIDED, HOWEVER, that a
party may, without the prior consent of the other parties to this Agreement,
issue such press release or make such public statement as may be required by law
or any listing agreement or arrangement to which any such person is a party with
a national securities exchange or if it has used
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all reasonable efforts to consult with the other parties to this Agreement and
to obtain such parties' consent but has been unable to do so in a timely manner.
Section 6.13 TAX COVENANTS.
(a) News Corp., or a qualified subsidiary, within the meaning of
Treas. Reg. Section 1.367(a)-3(c)(5)(vii), has been (for the thirty-six months
preceding the Effective Time) and will be engaged in the active conduct of a
trade or business outside of the United States, within the meaning of Treas.
Reg. Section 1.367(a)-3(c)(3)(i)(A) and Temp. Treas. Reg. Sections
1.367(a)-2T(b)(2) and (3), and News Corp. will satisfy the substantiality test
in Treas. Reg. Section 1.367(a)-3(c)(3)(i)(C) as of the Effective Time. As of
the Effective Time, News Corp. will not have any intention to substantially
dispose of or discontinue such trade or business.
(b) The Company will, and News Corp. and the Surviving Corporation
will cause the Company to, file the statement required by the reporting
requirements of Treas. Reg. Section 1.367-3(c)(6) using information that is
reasonably available.
(c) Each of News Corp. and the Company shall use its reasonable best
efforts to cause the Merger to qualify as a reorganization under Section 368(a)
of the Code and to obtain the opinion of counsel referred to in Section 7.2(e),
insofar as such opinion refers to tax matters.
(d) None of News Corp., the Surviving Corporation, the Company or any
of their affiliates shall knowingly take any action, or knowingly cause any
action to be taken, which would cause or permit the Merger to fail to qualify as
a reorganization under Section 368(a) of the Code.
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ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the following conditions:
(a) The Company shall have received the Company Stockholder Approval.
(b) The Effective Time shall have occurred at or before the close of
business in New York City on December 31, 1997 (the "Outside Date"); PROVIDED,
HOWEVER, that News Corp. shall not have the right to terminate this Agreement if
the Effective Time shall not have occurred solely as a result of the failure to
obtain the FCC approval for the transactions contemplated by the Transfer
Agreement.
(c) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(d) No action shall have been taken, and no statute, rule,
regulation, executive order, judgment, decree, or injunction (other than a
temporary restraining order) shall have been enacted, entered, promulgated or
enforced (and not repealed, superseded, lifted or otherwise made inapplicable),
by any court of competent jurisdiction or Governmental Entity which restrains,
enjoins or otherwise prohibits the consummation of the Transactions (each party
agreeing to use its commercially reasonable efforts to avoid the effect of any
such statute, rule, regulation or order or to have any such order, judgment,
decree or injunction lifted).
(e) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect.
(f) The News Corp. Preferred ADRs shall have been approved for
listing on the NYSE, subject only to official notice of issuance.
Section 7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. The obligations of the Company to effect the Merger are subject to the
satisfaction of the following conditions, unless waived by the Company:
(a) The representations and warranties of News Corp. contained
herein, without regard to any News Corp. Material Adverse Effect qualification,
shall be true and accurate, except in those instances where the aggregate
amounts represented by all breaches of such representations and warranties are
not likely to result, in a News Corp. Material Adverse Effect, at and as of the
Effective Time with the same force and effect as though made at and as of the
Effective Time (except to the extent a representation or warranty speaks
specifically as of an earlier date); PROVIDED, HOWEVER, that if information
which would constitute a breach of the representations and warranties of News
Corp. made in this Agreement is disclosed in the Proxy Statement and has been
brought to
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<PAGE>
the attention of News Corp., and if the Company has consented in writing to such
disclosure, then the Company shall be deemed to have waived this condition to
the performance of its obligations hereunder.
(b) News Corp. shall have performed, in all material respects, all
obligations and complied, in all material respects, with all covenants required
by this Agreement to be performed or complied with by it prior to the Effective
Time.
(c) News Corp. shall have delivered to the Company a certificate,
dated the Effective Time and signed by any two Directors of News Corp.,
evidencing compliance with Sections 7.2(a) and (b).
(d) All necessary regulatory and governmental approvals, consents and
waivers (including, without limitation, the approval of the FCC with respect to
the transactions contemplated by the Transfer Agreement, the ASX Waiver and, if
the ASX Waiver is not granted, the Shareholder Ratification) shall have been
obtained.
(e) The Company shall have received legal opinions of Squadron,
Ellenoff, Plesent & Sheinfeld, LLP, and Allen, Allen & Hemsley, counsel to News
Corp., in form and substance reasonably acceptable to the Company and its
counsel, including, without limitation, opinions that (i) the Merger will
qualify as a reorganization under Section 368(a) of the Code and (ii) except in
the case of a Company shareholder who is a "five-percent transferee
shareholder," as defined in Treas. Reg. Section 1.367-3(c)(5)(ii) with respect
to News Corp., and who does not properly file and maintain an agreement to
recognize gain under Temp. Treas. Reg. Section 1.367-3T(g), shareholders of the
Company will not recognize any gain or loss (except to the extent of cash
received in lieu of fractional shares) as a result of consummation of the
Merger.
Section 7.3 CONDITIONS TO OBLIGATIONS OF NEWS CORP. AND MERGER SUB TO
EFFECT THE MERGER. The obligations of News Corp. and Merger Sub to effect the
Merger are subject to the satisfaction of the following conditions, unless
waived by News Corp. and Merger Sub:
(a) The representations and warranties of the Company contained
herein, without regard to any Company or Business Unit Material Adverse Effect
qualification, shall be true and accurate, except in those instances where the
aggregate amount represented by all breaches of such representations and
warranties are not likely to result, in a Company Material Adverse Effect, at
and as of the Effective Time with the same force and effect as though made at
and as of the Effective Time (except to the extent a representation or warranty
speaks specifically as of an earlier date); PROVIDED, HOWEVER, that if
information which would constitute a breach of the representations and
warranties of the Company made in this Agreement is disclosed in the Proxy
Statement and has been brought to the attention of the Company and if News Corp.
has consented in writing to such disclosure, then News Corp. shall be deemed to
have waived this condition to the performance of its obligations hereunder.
(b) The Company shall have performed, in all material respects, all
obligations and complied, in all material respects, with all covenants required
by this Agreement to be performed or complied with by it prior to the Effective
Time.
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(c) The Company shall have delivered to News Corp. a certificate,
dated the Effective Time and signed by its Chairman of the Board and Chief
Executive Officer or President, evidencing compliance with Sections 7.3(a) and
(b).
(d) All third-party consents, authorizations and approvals shall have
been obtained, except for such consents, authorizations and approvals which,
individually or in the aggregate, would not result in a Business Unit Material
Adverse Effect.
(e) All necessary regulatory and governmental approvals, consents and
waivers (other than the approval of the FCC with respect to the transactions
contemplated by the Transfer Agreement, the ASX Waiver and, if the ASX Waiver is
not granted, the Shareholder Ratification) shall have been obtained.
(f) News Corp. shall have received the legal opinion of Crouch &
Hallett, LLP, in form and substance reasonably acceptable to News Corp. and its
counsel.
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
Section 8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by the mutual consent of News Corp. and the Company.
Section 8.2 TERMINATION BY EITHER NEWS CORP. OR THE COMPANY. This
Agreement may be terminated and the Merger may be abandoned by either News Corp.
or the Company if (i) the Effective Time shall not have occurred by the Outside
Date; PROVIDED, HOWEVER, that News Corp. shall not have the right to terminate
this Agreement if the Effective Time shall not have occurred solely as a result
of the failure to obtain the FCC approval for the transactions contemplated by
the Transfer Agreement, the ASX Waiver or, if the ASX Waiver is not granted, the
Shareholder Ratification, (ii) any court of competent jurisdiction in the United
States or any other jurisdiction shall have issued an order, judgment or decree
(other than a temporary restraining order) restraining, enjoining or otherwise
prohibiting the Merger and such order, judgment or decree shall have become
final and nonappealable or (iii) the Company Stockholder Approval is not
obtained at the Company Meeting; PROVIDED, HOWEVER, that the right to terminate
this Agreement pursuant to clause (i) shall not be available to any party whose
failure to fulfill any obligation under the Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date.
Section 8.3 TERMINATION BY NEWS CORP. This Agreement may be terminated
and the Merger may be abandoned by News Corp. (i) at any time prior to 5:00 p.m.
New York City time on Friday, March 21, 1997 if the due diligence review of
Actmedia, Inc. and its Subsidiaries (collectively, "Actmedia") conducted by News
Corp. shall have revealed matters which (A) are reasonably likely to have a
material adverse effect on any of Actmedia's material product lines, (B) are
inconsistent in any material respect with Actmedia's 1997 business plan,
previously furnished to News Corp., or (C) indicate, in News Corp.'s reasonable
judgment, that the material assumptions underlying Actmedia's 1997 business plan
are not reasonable and (ii) at any time prior to the Effective Time if
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<PAGE>
(A) there has been a material breach by the Company of any representation,
warranty, covenant or agreement set forth in this Agreement, which breach has
not been cured within ten Business Days following receipt by the Company of
notice of such breach from News Corp.; PROVIDED, HOWEVER, that the right to
terminate this Agreement pursuant to this Section 8.3(ii)(A) shall not be
available to News Corp. if News Corp., at such time, is in material breach of
any representation, warranty, covenant or agreement set forth in this Agreement,
or (B) the Board of Directors of the Company shall have withdrawn, rescinded or
modified in a manner adverse to News Corp. or Merger Sub its approval or
recommendation of this Agreement or the Merger or the Board of Directors of the
Company, upon reasonable request by News Corp., shall fail to reaffirm such
approval or recommendation, or shall have resolved to do any of the foregoing.
Section 8.4 TERMINATION BY THE COMPANY. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, by the Company (i) if there has been a material breach by News Corp. or
Merger Sub of any representation, warranty, covenant or agreement set forth in
this Agreement, which breach has not been cured within ten Business Days
following receipt by News Corp. of notice of such breach from the Company;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this
Section 8.4(i) shall not be available to the Company if the Company, at such
time, is in material breach of any representation, warranty, covenant or
agreement set forth in this Agreement, or (ii) prior to a vote of the Company's
stockholders approving the Merger, if the Board of Directors of the Company
receives an unsolicited written offer with respect to an Acquisition Proposal,
and the Board of Directors of the Company, in consultation with its investment
bankers, determines that such transaction is more favorable to the stockholders
of the Company than the Transactions and that, consistent with its fiduciary
duties as advised by counsel, it is required to approve, accept or recommend
such transaction, but only after giving News Corp. at least three Business Days'
notice of its intent to terminate this Agreement pursuant to this Section
8.4(ii) (describing in reasonable detail the transaction being considered, the
terms thereof and the parties thereto).
Section 8.5 EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement and abandonment of
the Merger pursuant to this Article VIII, no party hereto (or any of its
directors or officers) shall have any liability or further obligation to any
other party to this Agreement, except as provided in Section 8.5(b) below and
except that nothing herein will relieve any party from liability for any breach
of this Agreement. Without limiting the generality of the foregoing, if the
Effective Time shall not have occurred by the Outside Date as a result of the
failure to obtain FCC approval for the transactions contemplated by the Transfer
Agreement, the ASX Waiver, or, if the ASX Waiver is not granted, the Shareholder
Ratification, the Agreement shall remain in effect until terminated by the
Company, which shall be the sole remedy of the Company in such event.
(b) If the Company shall have terminated this Agreement pursuant to
Section 8.4(ii) or News Corp. shall have terminated this Agreement pursuant to
Section 8.3(ii) (but, in the case of Section 8.3(ii)(A), only if the Company has
willfully or intentionally made a material breach of any representation,
warranty or agreement for the purpose of avoiding payment of the Termination Fee
(as hereinafter defined), which breach has not been cured within ten Business
Days following receipt by the Company of notice of such breach from News Corp.)
the Company, if requested by
34
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News Corp., in News Corp.'s sole discretion, shall promptly, but in no event
later than two Business Days after the date of such request, (i) pay News Corp.
a fee (the "Termination Fee") equal to the sum of (x) $20,000,000 and (y) all
actual and documented out-of-pocket costs and expenses of News Corp. and Merger
Sub (up to a maximum of $5,000,000) incurred in connection with this Agreement
and the consummation and negotiation of the Transactions, including, without
limitation, legal, professional and service fees and expenses, which amount
shall be payable in same day funds. The Company acknowledges that the agreements
contained in this Section 8.5(b) are an integral part of the Transactions, and
that, without these agreements, News Corp. and Merger Sub would not enter into
this Agreement; accordingly, if the Company fails to comply with this Section
8.5(b), and, in order to obtain such compliance or damages in lieu thereof, News
Corp. or Merger Sub commences a suit which results in a judgment against the
Company for the Termination Fee, the Company shall pay to News Corp. its costs
and expenses (including attorneys' fees) in connection with such suit, together
with interest on the amount of the Termination Fee, from the date such payment
was required to be made under this Section 8.5(b) to the date of payment, at the
rate of nine percent (9%) per annum.
Section 8.6 AMENDMENT OR SUPPLEMENT. At any time before or after
approval of this Agreement by the stockholders of the Company and prior to the
Effective Time, this Agreement may be amended or supplemented in writing by the
Company, News Corp. and Merger Sub with respect to any of the terms contained in
this Agreement, except that following approval by the stockholders of the
Company there shall be no amendment or supplement which by law requires further
approval by such stockholders without further approval by the stockholders of
the Company.
Section 8.7 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Effective Time, the Company and News Corp. may:
(a) extend the time for the performance of any of the obligations or
acts of the other party;
(b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered pursuant hereto;
or
(c) waive compliance with any of the agreements or conditions of the
other party contained herein; PROVIDED, HOWEVER, that the Company may not waive
the condition set forth in Section 7.2(d); and PROVIDED, FURTHER, that no
failure or delay by the Company or News Corp. in exercising any right hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right hereunder.
Any agreement on the part of a party hereto to any extension or waiver
contemplated by this Section 8.7 shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
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<PAGE>
ARTICLE IX
INDEMNIFICATION
Section 9.1 THE MERGER. In the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
proceeding or investigation in which any of the present or former officers or
directors (the "Managers") of the Company or any of the Company Subsidiaries is,
or is threatened to be, made a party by reason of the fact that he or she is or
was a stockholder, director, officer, employee or agent of the Company or any of
the Company Subsidiaries, or is or was serving at the request of the Company or
any of the Company Subsidiaries as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
whether before or after the Effective Time, the Company shall indemnify and hold
harmless, and from and after the Effective Time each of the Surviving
Corporation and News Corp. shall indemnify and hold harmless, as and to the
fullest extent permitted by applicable law (including by advancing reasonable
expenses promptly as reasonable statements therefor are received), each such
Manager against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorneys' fees of attorneys designated after the
Effective Time by News Corp. in the absence of conflict), judgments, fines and
amounts paid in settlement in connection with any such claim, action, suit,
proceeding or investigation, and in the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) if the Company (prior to the Effective Time) or News Corp. or the
Surviving Corporation (after the Effective Time) have not promptly assumed the
defense of such matter, the Managers may retain counsel satisfactory to them,
and the Company, or the Surviving Corporation and News Corp. after the Effective
Time, shall pay all reasonable fees and expenses of such counsel for the
Managers promptly, as reasonable statements therefor are received, and (ii) the
Company, or the Surviving Corporation and News Corp. after the Effective Time,
will use their respective best efforts to assist in the defense of any such
matter; PROVIDED, HOWEVER, that neither the Company nor the Surviving
Corporation or News Corp. shall be liable for any settlement effected without
its prior written consent (which consent shall not be unreasonably withheld);
and PROVIDED, FURTHER, that the Surviving Corporation and News Corp. shall have
no obligation under the foregoing provisions of this Section 9.1 to any Manager
when and if a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and non-appealable, that
indemnification of such manager in the manner contemplated hereby is prohibited
by applicable law. Upon the finality of any such determination that the
Surviving Corporation or News Corp. is not liable for any such indemnification
claims, the Manager will reimburse News Corp. and the Surviving Corporation for
any reasonable fees, expenses and costs incurred by News Corp. or the Surviving
Corporation in connection with the defense of such claims. Any Manager wishing
to claim indemnification under this Section 9.1, upon learning of any such
claim, action, suit, proceeding or investigation, shall notify the Company and,
after the Effective Time, the Surviving Corporation and News Corp, thereof
(provided that the failure to give such notice shall not affect any obligations
hereunder, except to the extent that the indemnifying party is actually and
materially prejudiced thereby). News Corp. and the Company agree that all rights
to indemnification existing in favor of the Managers, as provided in the
Certification of Incorporation or Bylaws of the Company as in effect as of the
date hereof, and in any agreement between the Company and any Manager with
respect to matters occurring prior to the Effective Time, shall survive the
Merger to the extent permitted by applicable law. The Surviving Corporation and
News Corp. further covenant not to amend or repeal
36
<PAGE>
any provisions of the Certification of Incorporation or Bylaws of the Company in
any manner which would adversely affect the indemnification or exculpatory
provisions contained therein. The provisions of this Section 9.1 are intended to
be for the benefit of, and shall be enforceable by, each indemnified party and
his or her heirs and representatives.
Section 9.2 DIRECTORS' AND OFFICERS' INSURANCE. For six years from the
Effective Time, the Surviving Corporation shall either (x) maintain in effect
the Company's current directors' and officers' liability insurance covering
those Managers who are currently covered on the date of this Agreement by the
Company's directors' and officers' liability insurance policy (a copy of which
has been heretofore delivered to News Corp.); PROVIDED, HOWEVER, that the
Surviving Corporation may substitute for such Company policies, policies with at
least the same coverage containing terms and conditions which are no less
advantageous to the Manager; and PROVIDED, FURTHER, that said substitution does
not result in any gaps or lapses in coverage with respect to matters occurring
prior to the Effective Time or (y) to the extent applicable, cause the News
Corp.'s directors' and officers' liability insurance policy with respect to
those matters covered by the Company's directors' and officers' liability
insurance policy. The provisions of this Section 9.2 are intended to be for the
benefit of, and shall be enforceable by, each Manager and his or her heirs and
representatives.
ARTICLE X
MISCELLANEOUS
Section 10.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Merger or the termination of this
Agreement pursuant to Article VIII. All of the covenants and agreements in this
Agreement shall survive the Merger indefinitely. Except for the covenants and
agreements contained in Sections 6.3 and 6.6 and this Article X, none of the
covenants and agreements contained in this Agreement shall survive the
termination of this Agreement pursuant to Article VIII.
Section 10.2 EXPENSES. Except as provided in Section 8.5 hereof, whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the Transactions shall be paid by the party incurring
such expenses, except that the expenses incurred in connection with the
preparation and printing of the Proxy Statement/Prospectus shall be paid in
equal shares by the Company and News Corp. (other than attorneys' and
accountants' fees, which shall be borne by the party incurring them).
Section 10.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered the same agreement.
Section 10.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. News Corp.
hereby appoints News America Publishing Incorporated, 1211 Avenue of the
Americas, New York, New York 10036, Attention: Arthur M. Siskind, as its
authorized agent (the "Authorized Agent") upon which process may be served in
any such action arising out of or based upon this Agreement or the Transactions
that may be instituted in any Court by any party hereto and expressly
37
<PAGE>
consents to the jurisdiction of any such Court, but only in respect of any such
action, and waives any other requirements of or objections to personal
jurisdiction with respect thereto. News Corp. represents and warrants that the
Authorized Agent has agreed to act as said agent for service of process, and
News Corp. agrees to take any and all action, including the filing of any and
all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. If the Authorized Agent shall
cease to act as News Corp.'s agent for service of process, News Corp. shall
appoint without delay another such agent and notify the Company of such
appointment. With respect to any such action in the Courts, service of process
upon the Authorized Agent and written notice of such service to News Corp. shall
be deemed, in every respect, effective service of process upon News Corp.
Section 10.5 SPECIFIC PERFORMANCE. Each of the parties acknowledges and
agrees that the other parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter, in addition to any other remedy to
which they may be entitled, at law or in equity.
Section 10.6 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered by hand, mailed by
registered or certified mail (return receipt requested) or sent by prepaid
overnight courier (with proof of service) or confirmed facsimile transmission to
the parties as follows (or at such other addresses for a party as shall be
specified by like notice) and shall be deemed given on the date on which so
hand-delivered, mailed, delivered or sent by confirmed facsimile transmission:
To the Company:
Heritage Media Corporation
13355 Noel Road, Suite 1500
Dallas, Texas 75240
Facsimile: (972) 702-7382
Attn: David N. Walthall
with a copy (which shall not constitute notice) to:
Crouch & Hallett, L.L.P.
717 N. Harwood, 14th Floor
Dallas, Texas 75201
Facsimile: (214) 953-3154
Attn: Bruce H. Hallett, Esq.
38
<PAGE>
To News Corp. or Merger Sub:
The News Corporation Limited
c/o News America Publishing Incorporated
1211 Avenue of the Americas
New York, New York 10036
Facsimile: (212) 768-2029
Attn: Arthur M. Siskind, Esq.
with a copy (which shall not constitute notice) to:
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Facsimile: (212) 697-6686
Attn: Joel I. Papernik, Esq.
Section 10.7 MISCELLANEOUS. This Agreement:
(a) together with the Exhibits and the Schedules, constitutes the
entire agreement, and supersedes all other prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof and thereof, including without limitation the Confidentiality Agreement
between the Company and News Corp., dated as of January 27, 1997;
(b) is not intended to and shall not confer upon any person other
than the parties hereto any rights or remedies hereunder or by reason hereof,
except as provided in Article IX hereof; and,
(c) shall not, nor shall any of the rights or interests hereunder, be
assigned by any party hereto or assignable by operation of law or otherwise
without the prior written consent of the other parties; PROVIDED, HOWEVER, that
News Corp. may assign its rights under this Agreement to any News Corp.
Subsidiary so long as News Corp. remains responsible for all of its obligations
hereunder.
Section 10.8 HEADINGS. The headings contained in this Agreement are for
reference purposes and shall not affect in any way the meaning or interpretation
of this Agreement.
Section 10.9 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
HERITAGE MEDIA CORPORATION
By: /s/ David N. Walthall
-----------------------------------
Name: David N. Walthall
Title: President and Chief Executive Officer
THE NEWS CORPORATION LIMITED
By: /s/ Arthur M. Siskind
-----------------------------------
Arthur M. Siskind
Director
HMC ACQUISITION CORP.
By: /s/ Lawrence A. Jacobs
-----------------------------------
Name: Lawrence A. Jacobs
Title: Vice President
40
<PAGE>
AMENDMENT TO RIGHTS AGREEMENT
This Amendment to Rights Agreement, dated as of March 17, 1997 (this
"Supplement"), is by and between Heritage Media Corporation, a Delaware
corporation (the "Company"), and The Bank of New York, a New York banking
corporation (the "Rights Agent"), and amends that certain Rights Agreement,
dated August 15, 1994 (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company desires to enter into that
certain Agreement and Plan of Merger (the "Merger Agreement"), by and among the
Company, The News Corporation Limited ("News Corp.") and HMC Acquisition
Corporation, a wholly owned subsidiary of News Corp. (the "Acquisition
Subsidiary"), pursuant to the Company will merge (the "Merger") with and into
the Acquisition Subsidiary, and each of the outstanding shares of the Company's
common stock will be converted into the right to receive American Depositary
Shares of News. Corp.; and
WHEREAS, in order to consummate the Merger, the Board of Directors desires
to amend the Rights Agreement so that neither News Corp. nor the Acquisition
Subsidiary will become an "Acquiring Person" as a result of the Merger and,
therefore, the rights will not become exercisable; and
WHEREAS, this Amendment is a condition to News Corp.'s and the Acquisition
Subsidiary's execution and delivery of the Merger Agreement;
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. The Rights Agreement is hereby amended in the following respects:
Section 1(a) is hereby amended by adding the following sentence
to the end of the definition of "Acquiring Person":
"Notwithstanding the foregoing, neither The News Corporation
Limited nor HMC Acquisition Corp. shall be Acquiring Persons
as a result of the execution of the Agreement and Plan of
Merger dated March 16, 1997 by and among the Company and
such corporation or the consummation of the transactions
contemplated thereby."
Section 25 is hereby amended by adding the following sentence to
the end of such section:
<PAGE>
Notwithstanding the foregoing, the notice of the merger
contemplated by the Agreement and Plan of Merger dated March
16, 1997 by and among the Company, The News Corporation
Limited and HMC Acquisition Corp. may be delivered to the
stockholders of the Company by the delivery of the notice of
special meeting and related proxy statement for the special
meeting of stockholders in which the proposed merger will be
submitted to the Company's stockholders for approval.
A new Section 35 is hereby added:
This Agreement and the Rights established hereby will terminate
in all respects upon the consummation of the merger contemplated by
the Agreement and Plan of Merger dated March 16, 1997 by and among the
Company, The News Corporation Limited and HMC Acquisition Corp.
2. By the execution of this Amendment, the Company hereby gives notice to the
Rights Agent of the Merger as required under Section 25 of the Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and their respective corporate seals to be affixed and attested,
all as of the day and year first above written.
HERITAGE MEDIA CORPORATION
By: /s/ David N. Walthall
-------------------------------------------
David N. Walthall
President
Attest:
By: /s/ James P. Lehr
--------------------------------
James P. Lehr
Senior Vice President and
Assistant Secretary
2
<PAGE>
THE BANK OF NEW YORK,
as Rights Agent
By: /s/ Kevin Brennan
-----------------------------
Name: Kevin Brennan
Title: Vice President
Attest:
By: /s/ Steven Myers
------------------------------
Name: Steven Myers
Title: Assistant Treasurer
3
<PAGE>
U.S. $50,000,000
CREDIT AGREEMENT
Dated as of May 31, 1996
Among
HERITAGE MEDIA SERVICES, INC.
as Borrower
and
THE LENDERS PARTY THERETO
and
CITIBANK, N.A.
as Administrative Agent
and
NATIONSBANK OF TEXAS, N.A.
as
Documentation Agent
<PAGE>
T A B L E OF C O N T E N T S
SECTION PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. COMPUTATION OF TIME PERIODS . . . . . . . . . . . . . . . . . . . 21
1.3. ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.4. CERTAIN TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
2.1. THE LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2. MAKING THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.3. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4. REDUCTION AND TERMINATION OF THE COMMITMENTS . . . . . . . . . . . 23
2.5. REPAYMENTS AND PREPAYMENTS . . . . . . . . . . . . . . . . . . . . 24
2.6. CONVERSION/CONTINUATION OPTION . . . . . . . . . . . . . . . . . . 24
2.7. INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.8. INTEREST RATE DETERMINATION AND PROTECTION . . . . . . . . . . . . 25
2.9. INCREASED COSTS. . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.10. ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.11. CAPITAL ADEQUACY . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.12. PAYMENTS AND COMPUTATIONS. . . . . . . . . . . . . . . . . . . . . 28
2.13. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.14. SHARING OF PAYMENTS, ETC . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE III
CONDITIONS OF LENDING
3.1. CONDITIONS PRECEDENT TO INITIAL LOANS. . . . . . . . . . . . . . . 31
3.2. ADDITIONAL CONDITIONS PRECEDENT TO INITIAL LOANS . . . . . . . . . 32
3.3. CONDITIONS PRECEDENT TO EACH LOAN. . . . . . . . . . . . . . . . . 33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW . . . . . . . . . . . . . 34
<PAGE>
4.2. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. . . . . . 35
4.3. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.4. FULL DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.5. FINANCIAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 37
4.6. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.7. MARGIN REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . 38
4.8. OWNERSHIP OF BORROWER; SUBSIDIARIES. . . . . . . . . . . . . . . . 39
4.9. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.10. LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.11. RELATED DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 41
4.12. NO BURDENSOME RESTRICTIONS; NO DEFAULTS. . . . . . . . . . . . . . 41
4.13. NO OTHER VENTURES. . . . . . . . . . . . . . . . . . . . . . . . . 42
4.14. INVESTMENT COMPANY ACT . . . . . . . . . . . . . . . . . . . . . . 42
4.15. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.16. LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.17. FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.18. USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.19. ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . 43
4.20. TRANSACTION COSTS AND FEES . . . . . . . . . . . . . . . . . . . . 43
4.21. INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 43
4.22. TITLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.23. CERTAIN INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . 45
4.24. RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE V
FINANCIAL COVENANTS
5.1. TOTAL DEBT TO EBITD RATIO. . . . . . . . . . . . . . . . . . . . . 45
5.2. TOTAL INTEREST COVERAGE RATIO. . . . . . . . . . . . . . . . . . . 46
5.3. TOTAL DEBT SERVICE RATIO . . . . . . . . . . . . . . . . . . . . . 46
5.4. CAPITAL EXPENDITURES . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VI
ADDITIONAL AFFIRMATIVE COVENANTS
6.1. COMPLIANCE WITH LAWS, ETC. . . . . . . . . . . . . . . . . . . . . 47
6.2. CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . 47
6.3. PAYMENT OF TAXES, ETC. . . . . . . . . . . . . . . . . . . . . . . 47
6.4. MAINTENANCE OF INSURANCE . . . . . . . . . . . . . . . . . . . . . 47
6.5. PRESERVATION OF CORPORATE EXISTENCE, ETC.. . . . . . . . . . . . . 47
6.6. ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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<PAGE>
6.7. KEEPING OF BOOKS . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.8. MAINTENANCE OF PROPERTIES, ETC . . . . . . . . . . . . . . . . . . 48
6.9. PERFORMANCE AND COMPLIANCE WITH OTHER COVENANTS. . . . . . . . . . 48
6.10. APPLICATION OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . 48
6.11. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 48
6.12. REPORTING REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . 49
6.13. BROKER'S FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.14. EMPLOYEE PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.15. ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . 52
6.16. MAINTENANCE OF LICENSES AND PERMITS. . . . . . . . . . . . . . . . 53
6.17. AUDITOR'S LETTER . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.18. FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VII
NEGATIVE COVENANTS
7.1. LIENS, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.2. INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.3. LEASE OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 56
7.4. RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . 56
7.5. MERGERS, SALE OF ASSETS, ETC.. . . . . . . . . . . . . . . . . . . 57
7.6. INVESTMENTS IN OTHER PERSONS . . . . . . . . . . . . . . . . . . . 58
7.7. MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES . . . . . . . . . . . . . 59
7.8. CHANGE IN NATURE OF BUSINESS . . . . . . . . . . . . . . . . . . . 59
7.9. COMPLIANCE WITH ERISA. . . . . . . . . . . . . . . . . . . . . . . 59
7.10. MODIFICATION OF RELATED DOCUMENTS. . . . . . . . . . . . . . . . . 59
7.11. MODIFICATION OF MATERIAL AGREEMENTS. . . . . . . . . . . . . . . . 60
7.12. ACCOUNTING CHANGES . . . . . . . . . . . . . . . . . . . . . . . . 60
7.13. CONTINGENT OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . 60
7.14. TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . . . 60
7.15. ADVERSE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 61
7.16. CANCELLATION OF INDEBTEDNESS OWED TO IT. . . . . . . . . . . . . . 61
7.17. ACQUISITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.18. CAPITAL STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . . . 61
7.19. NO SPECULATIVE TRANSACTIONS. . . . . . . . . . . . . . . . . . . . 62
7.20. INTERNAL REVENUE CODE SECTION 338. . . . . . . . . . . . . . . . . 62
7.21. MARGIN REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VIII
EVENTS OF DEFAULT
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<PAGE>
8.1. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE IX
THE ADMINISTRATIVE AGENT; THE DOCUMENTATION AGENT;
THE COLLATERAL AGENT
9.1. AUTHORIZATION AND ACTION . . . . . . . . . . . . . . . . . . . . 65
9.2. ADMINISTRATIVE AGENT'S RELIANCE, ETC.. . . . . . . . . . . . . . 66
9.3. AGENTS AND AFFILIATES. . . . . . . . . . . . . . . . . . . . . . 66
9.4. LENDER CREDIT DECISION . . . . . . . . . . . . . . . . . . . . . 67
9.5. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 67
9.6. SUCCESSOR AGENTS . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE X
MISCELLANEOUS
10.1. AMENDMENTS, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . 68
10.2. NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.3. NO WAIVER; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 69
10.4. COSTS; EXPENSES; INDEMNITIES. . . . . . . . . . . . . . . . . . . 69
10.5. RIGHT OF SET-OFF. . . . . . . . . . . . . . . . . . . . . . . . . 71
10.6. ASSIGNMENTS AND PARTICIPATIONS. . . . . . . . . . . . . . . . . . 71
10.7. BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.8. GOVERNING LAW; SEVERABILITY . . . . . . . . . . . . . . . . . . . 73
10.9. SUBMISSION TO JURISDICTION; JURY TRIAL. . . . . . . . . . . . . . 74
10.10. SECTION TITLES. . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.11. EXECUTION IN COUNTERPARTS . . . . . . . . . . . . . . . . . . . . 75
10.12. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 75
10.13. RATE PROVISION. . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.14. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . 75
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<PAGE>
SCHEDULES
Schedule I - List of Applicable Lending Offices and Addresses for
Notices
Schedule II - Commitment
Schedule III - Certain Interest Rate Contracts
Schedule 4.3 - Tax Matters
Schedule 4.6 - Litigation
Schedule 4.8 - List of Subsidiaries
Schedule 4.9 - ERISA
Schedule 4.12 - Burdensome Restrictions; Defaults
Schedule 4.13 - Joint Ventures, Etc.
Schedule 4.19 - Environmental Matters
Schedule 4.21 - Intellectual Property
Schedule 4.22(a) - List of Owned Real Estate
Schedule 4.22(b) - List of Leased Real Estate
Schedule 4.22(d) - Condemnations
Schedule 4.23 - Certain Indebtedness
Schedule 4.24 - Permitted Restricted Payments
Schedule 7.1 - Existing Liens
Schedule 7.5(a) - Certain Acquisitions
Schedule 7.5(c) - Permitted Dispositions
Schedule 7.6 - Existing Investments
Schedule 7.13 - Contingent Obligations
Schedule 7.14 - Transactions with Affiliates
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<PAGE>
EXHIBITS
Exhibit A - Form of Notice of Borrowing
Exhibit B - Form of Notice of Conversion or Continuation
Exhibit C - Form of Subsidiary Guaranty
Exhibit D - Form of Parent Guaranty
Exhibit E - Form of Note
Exhibit F - Form of Assignment and Acceptance
Exhibit G - Form of Opinion of Crouch & Hallett
Exhibit H - Form of Opinion of Wayne Kern
Exhibit I - Form of Auditor's Letter
Exhibit J - Form of Certificate
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<PAGE>
CREDIT AGREEMENT, dated as of May 31, 1996, among HERITAGE MEDIA SERVICES,
INC., an Iowa corporation (the "Borrower"), the financial institutions listed on
the signature pages hereof (the "Lenders"), CITIBANK, N.A. ("Citibank"), as
administrative agent hereunder for the Lenders (in such capacity, the
"Administrative Agent"), and NATIONSBANK OF TEXAS, N.A. ("NationsBank"), as
documentation agent hereunder for the Lenders (in such capacity, the
"Documentation Agent").
W I T N E S S E T H :
WHEREAS, the Borrower is a wholly owned subsidiary of Heritage Media
Corporation, an Iowa corporation (the "Parent"); and
WHEREAS, the Borrower wishes to refinance the indebtedness evidenced by the
outstanding Senior Notes (as hereinafter defined); and
WHEREAS, the Borrower has requested that the Lenders provide the Borrower
with a portion of the funds required to enable the Borrower to refinance the
indebtedness evidenced by the Senior Notes pursuant to a purchase of all or a
portion of the Senior Notes; and
WHEREAS, the Lenders are willing to make funds available for such purpose
upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. DEFINED TERMS. As used in this Agreement, the following terms have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"ACQUISITION" shall mean any transaction pursuant to which any Person,
(i) whether by means of a capital contribution or purchase or other
acquisition of stock or other securities or other equity participation or
interest, (A) acquires more than 50% of the equity interest in any Person
pursuant to a solicitation by, or tenders of equity securities of, such
Person, or through one or more negotiated block, market, private or other
transactions not involving a tender offer, or a combination of any of the
foregoing, (B) makes any corporation a Subsidiary, or causes any corporation,
other than a Subsidiary, to be merged into (or agrees to be merged into any
other corporation other than a wholly-owned Subsidiary of such Person) such
Person, or (C) agrees to purchase all or substantially all of the assets of
any corporation, pursuant to a merger, purchase of assets or other
reorganization providing for the delivery or issuance to the holders of such
<PAGE>
corporation's then outstanding securities, in exchange for such securities,
of cash or securities of such Person, or any combination thereof, or (ii)
purchases all or substantially all of the business or assets of any Person or
of any operating division of any Person.
"ACQUISITION CONSIDERATION" shall mean the consideration given by the
Borrower or any of its Subsidiaries for an Acquisition, including but not
limited to the fair market value of any cash, property, stock or services given,
the amount of any Indebtedness assumed or incurred by the Borrower or any
Subsidiary in connection with such Acquisition.
"ACQUISITION INDEBTEDNESS" means the 8.75% Senior Subordinated Notes due
2006 of the Parent, issued pursuant to that certain Indenture, dated as of
February 13, 1996, between the Parent and The Bank of New York, as Trustee.
"ACTMEDIA" means Actmedia, Inc., a Delaware corporation.
"ACTMEDIA NOTE" means, collectively, the Note, dated June 22, 1992,
executed by Actmedia in favor of the Borrower, and the Note, dated June 22,
1992, executed by POP Radio Corporation in favor of HMI and assumed by Actmedia,
as the same may be amended, supplemented or otherwise modified from time to
time.
"AFFILIATE" means, as to any Person, any Subsidiary of such Person and any
other Person which, directly or indirectly, controls, is controlled by or is
under common control with such Person and includes each officer or director or
general partner of such Person, and each Person who is the beneficial owner of
10% or more of any class of voting Stock of such Person. For the purposes of
this definition, (a) "control" means the possession of the power to direct or
cause the direction of management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise and (b) neither
Citibank, NationsBank, nor any Lender nor any of their respective Affiliates
shall be deemed to be an Affiliate of the Borrower.
"AGENTS" means, collectively, the Administrative Agent, the Documentation
Agent and the Collateral Agent.
"AGREEMENT" means this Credit Agreement, together with all Exhibits and
Schedules hereto, as the same may be amended, supplemented or otherwise modified
from time to time.
"APPLICABLE BASE RATE MARGIN" means, for any particular date for any
Base Rate Loan, that rate of interest per annum equal to the rate set forth
below opposite the Total Debt to EBITD Ratio which is in effect for such
particular date. Such rate of interest applicable to any particular date
will be determined quarterly by the Administrative Agent upon receipt of a
certificate of the Borrower setting forth the Total Debt to EBITD Ratio (and
its computation) as of the last day of the most recent Fiscal Quarter then
ended and signed by a Responsible Officer of the Borrower pursuant to Section
6.11(a) or 6.11(b) or, if the Administrative Agent shall not have received
such a certificate pursuant to Section 6.11(a) or 6.11(b) with respect to the
last day of the most recent
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<PAGE>
Fiscal Quarter then ended, such rate of interest shall be equal to 1.00%
until such time as such certificate is received. All such determinations
shall be effective on the fifth Business Day following receipt of such
certificate or, if no such certificate shall be received in accordance with
Section 6.11(a) or 6.11(b), as the case may be, then on the fifth day
following expiration of the period during which receipt should have occurred
under Section 6.11(a) or 6.11(b), as the case may be.
TOTAL DEBT TO EBITD RATIO APPLICABLE MARGIN
Greater than or equal to 5.0 to 1.0 1.00%
Greater than or equal to 4.5 to 1.0 0.50%
but less than 5.0 to 1.0
Greater than or equal to 4.0 to 1.0 0.25%
but less than 4.5 to 1.0
Less than 4.0 to 1.0 0.00%
"APPLICABLE EURODOLLAR RATE MARGIN" means, for any particular date for any
Eurodollar Rate Loan, that rate of interest per annum equal to the rate set
forth below opposite the Total Debt to EBITD Ratio which is in effect for such
particular date. Such rate of interest applicable to any particular date will
be determined quarterly by the Administrative Agent upon receipt of a
certificate of the Borrower setting forth the Total Debt to EBITD Ratio (and its
computation) as of the last day of the most recent Fiscal Quarter then ended and
signed by a Responsible Officer of the Borrower pursuant to Section 6.11(a) or
6.11(b) or, if the Administrative Agent shall not have received such a
certificate pursuant to Section 6.11(a) or 6.11(b) with respect to the last day
of the most recent Fiscal Quarter then ended, such rate of interest shall be
equal to 2.00% until such time as such certificate is received. All such
determinations shall be effective on the fifth Business Day following receipt of
such certificate of the Borrower or, if no such certificate shall be received in
accordance with Section 6.11(a) or 6.11(b), as the case may be, then on the
fifth day following expiration of the period during which receipt should have
occurred under Section 6.11(a) or 6.11(b), as the case may be.
TOTAL DEBT TO EBITD RATIO APPLICABLE MARGIN
Greater than or equal to 5.0 to 1.0 2.00%
Greater than or equal to 4.5 to 1.0 but less 1.50%
than 5.0 to 1.0
Greater than or equal to 4.0 to 1.0 but less 1.25%
than 4.5 to 1.0
Greater than or equal to 3.5 to 1.0 but less 1.00%
than 4.0 to 1.0
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<PAGE>
Greater than or equal to 2.75 to 1.0 but less 0.75%
than 3.5 to 1.0
Less than 2.75 to 1.0 0.50%
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, its
Domestic Lending Office in the case of a Base Rate Loan, and its Eurodollar
Lending Office in the case of a Eurodollar Rate Loan.
"ASSESSMENT RATE" for any Interest Period means the annual assessment rate
estimated by the Administrative Agent on the first day of such Interest Period
for determining the then current annual assessment payable by Citibank to the
Federal Deposit Insurance Corporation (or any successor) for insuring U.S.
dollar deposits of Citibank in the United States.
"ASSET SALE" means any sale or other disposition, or series of sales or
other dispositions (including, without limitation, by merger or consolidation,
and whether by operation of law or otherwise), made on or after the Closing Date
by the Borrower or any of its Subsidiaries to any Person (other than the
Borrower or any of its Subsidiaries) of (a) all or substantially all of the
outstanding Stock of any of its Subsidiaries, (b) all or substantially all of
its assets or the assets of any division of the Borrower or any of its
Subsidiaries or (c) any other asset or assets of the Borrower or any of its
Subsidiaries not made in the ordinary course of business; PROVIDED, HOWEVER,
that neither of the following shall be considered Asset Sales hereunder:
(i) any Asset Sale yielding Asset Sale Proceeds of less than $500,000 in the
aggregate and (ii) the sale or other disposition by the Borrower or any of its
Subsidiaries of worn out or obsolete assets.
"ASSET SALE PROCEEDS" means cash payments received by the Borrower or
any of its Subsidiaries (including, without limitation, any cash payments
received by way of deferred payment of principal pursuant to a note or
receivable or otherwise, but only as and when received) from any Asset Sale
(after repayment of any Indebtedness due by reason of such Asset Sale or to
effect the release of any Lien on the property or assets being sold), in each
case net of the amount of (a) reasonable brokers' and advisors' fees and
commissions payable other than to an Affiliate of the Borrower in connection
with such Asset Sale, (b) all foreign, federal, state and local taxes
reasonably estimated to be payable as a direct consequence of such Asset
Sale, including, without limitation, in connection with the payment of a
dividend or the making of a distribution by a Subsidiary of the Borrower of
such payments to the Borrower or any other Subsidiary of the Borrower, net of
any current tax benefits derived in respect of such dividend or distribution,
(c) the reasonable fees and expenses (including, without limitation,
severance payments) attributable to such Asset Sale, to the extent not
included in clause (a) and (d) any amount required to be paid to any Person
(other than the Borrower and any of its Subsidiaries) owning a beneficial
interest in the property or assets sold. For purposes of this definition,
Asset Sale Proceeds shall be deemed to include, without limitation, any award
of compensation for any asset or property or group thereof taken by
condemnation or eminent domain and insurance proceeds for the loss of or
damage to any asset or property if such award or proceeds equals or exceeds
$1,000,000 (per
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<PAGE>
occurrence) and within 120 days after the receipt thereof replacement
or repair of such asset or property has not commenced, except that in the
event that at any time such replacement or repair is abandoned or is
otherwise discontinued or is not diligently pursued, the remaining award or
proceeds, as the case may be, shall constitute Asset Sale Proceeds at such
time.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into
by a Lender and an assignee in accordance with the provisions of Section 10.6,
and accepted by the Administrative Agent, in substantially the form of
Exhibit F.
"AVAILABLE COMMITMENT" means, with respect to any Lender on any date, an
amount equal to (a) the Commitment of such Lender on such date MINUS (b) such
Lender's Loans outstanding on such date, and "AVAILABLE COMMITMENTS" means, with
respect to all Lenders on any date an amount equal to (a) the Commitments of all
Lenders on such date MINUS (b) all Loans outstanding on such date.
"BASE RATE" means, for any period, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall be equal at all
times to the highest of:
(a) the rate of interest announced publicly by Citibank in New York,
New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of one percent or, if there
is no nearest 1/4 of one percent, to the next higher 1/4 of one percent) of
(i) 1/2 of one percent per annum, PLUS (ii) the rate per annum obtained by
dividing (A) the latest three-week moving average of secondary market
morning offering rates in the United States for three-month certificates of
deposit of major United States money market banks, such three-week moving
average being determined weekly on each Monday (or, if any such day is not
a Business Day, on the next succeeding Business Day) for the three-week
period ending on the previous Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Citibank
from three New York certificate of deposit dealers of recognized standing
selected by Citibank, by (B) a percentage equal to 100% MINUS the average
of the daily percentages specified during such three-week period by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not limited to,
any emergency, supplemental or other marginal reserve requirement) for
Citibank in respect of liabilities consisting of or including (among other
liabilities) three-month U.S. dollar nonpersonal time deposits in the
United States, PLUS (iii) the average during such three-week period of the
annual assessment rates estimated by Citibank for determining the then
current annual assessment payable by Citibank to the Federal Deposit
Insurance Corporation (or any successor) for insuring U.S. dollar deposits
of Citibank in the United States; and
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(c) the sum of (i) 1/2 of one percent per annum PLUS (ii) the Federal
Funds Rate.
"BASE RATE LOAN" means any outstanding principal amount of the Loans of any
Lender that bears interest with reference to the Base Rate.
"BORROWING" means a borrowing consisting of Loans made on the same day by
the Lenders ratably according to their respective Commitment, and, in the case
of Eurodollar Rate Loans, having the same Interest Period.
"BORROWING TERMINATION DATE" means the earlier of (i) June 15, 1997 or
(ii) such earlier date that the Available Commitments are reduced to zero.
"BUSINESS DAY" means a day of the year on which banks are not required or
authorized to close in New York City and, if the applicable Business Day relates
to a Eurodollar Rate Loan, a day on which dealings are also carried on in the
London interbank market.
"CAPITAL EXPENDITURES" means, for any Person for any period, the aggregate
of all expenditures by such Person and its Subsidiaries, except interest
capitalized during construction, during such period for property, plant or
equipment, including, without limitation, renewals, improvements, replacements
and capitalized repairs, which would be reflected as additions to property,
plant or equipment on a consolidated balance sheet of such Person and its
Subsidiaries prepared in conformity with GAAP. For the purpose of this
definition, the purchase price of equipment which is acquired concurrently with
the trade-in of existing equipment owned by such Person or any of its
Subsidiaries or with insurance proceeds shall be included in Capital
Expenditures only to the extent of the gross amount of such purchase price less
the credit granted by the seller of such equipment being traded in at such time
or the amount of such proceeds, as the case may be, and the purchase price of
equipment which is acquired in connection with the sale or other disposition of
capital assets which have been replaced or superseded shall be included in
Capital Expenditures only to the extent of the gross amount of such purchase
price less any cash received from such sale or other disposition.
Notwithstanding any of the above, any costs to the Borrower or any of its
Subsidiaries in making, or directly resulting from, any Permitted Investment
shall not be considered Capital Expenditures if the Borrower, within 90 days
following the incurrence of such costs, notifies the Administrative Agent that
such costs are not to be considered Capital Expenditures.
"CAPITALIZED LEASE" means, as to any Person, any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in conformity with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" means, as to any Person, the capitalized
amount of all obligations of such Person or any of its Subsidiaries under
Capitalized Leases, as determined in conformity with GAAP.
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"CASH EQUIVALENTS" means (a) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or insured by the United
States government or any agency thereof, (b) certificates of deposit, Eurodollar
time deposits, overnight bank deposits and bankers' acceptances of, and retail
repurchase agreements with, any bank having combined capital and surplus of at
least $250,000,000 or any Lender, which deposits, bankers' acceptances or
agreements have remaining terms or maturities of one year or less from the date
of acquisition and (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Corporation or P-l by Moody's Investors Service, Inc., or
carrying an equivalent rating by a nationally recognized rating agency if both
of the two named rating agencies cease publishing ratings of investments. In
addition, when used in respect of Investments by Subsidiaries of the Borrower
incorporated under the laws of a foreign country, "Cash Equivalents" shall
include Investments in obligations of issuers located in such country which are
essentially equivalent to those described in clauses (a), (b) and (c) above.
"CHANGE OF CONTROL" means the occurrence of either of the following events
after the Closing Date: (a) any Person or any Persons acting together which
would constitute a "group" (a "Group") for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor provision thereto, other than the Group whose nominees constituted a
majority of the board of directors of the Parent or the Borrower as of the
Closing Date, together with any Affiliates or Related Persons thereof, shall
beneficially own (as defined in Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act or any successor provision thereto) at least
50% of the aggregate voting power of all classes of Stock of the Borrower
entitled to vote generally in the election of directors of the Borrower; or
(b) any Person or Group, together with any Affiliates or Related Persons
thereof, shall succeed in having sufficient of its or their nominees elected to
the Board of Directors of the Borrower such that such nominees, when added to
any existing director remaining on the Board of Directors of the Borrower after
such election who is an Affiliate or Related Person of such Group, shall
constitute a majority of the Board of Directors of the Borrower.
"CLOSING DATE" means the first date on which any Loan is made pursuant to
Article II.
"CODE" means the Internal Revenue Code of 1986 (or any successor
legislation thereto), as amended from time to time.
"COLLATERAL" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by any Loan Party in or upon which a
Lien is granted under any of the Loan Documents.
"COLLATERAL AGENCY AGREEMENT" means the Collateral Agency Agreement, dated
June 22, 1992, executed by the Administrative Agent, the Collateral Agent and
the Trustee, as such agreement may be amended, supplemented, or otherwise
modified from time to time.
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"COLLATERAL AGENT" means Citibank, in its capacity as Collateral Agent
under the Pledge Agreement and under the Collateral Agency Agreement, and any
successor thereto.
"COLLATERAL DOCUMENTS" means the Pledge Agreement, the HMI Note and any
other document now or hereafter executed and delivered by a Loan Party granting
a Lien on any of its property to secure payment of the Obligations.
"COMMITMENT" means, as to each Lender, the commitment of such Lender to
make Loans to the Borrower pursuant to Section 2.1 in the aggregate principal
amount outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule II, as such Lender's "Commitment", as such amount may be
reduced or modified pursuant to this Agreement and "COMMITMENTS" means an amount
equal to the aggregate of each Lender's Commitment.
"CONSOLIDATED NET INCOME (LOSS)" means, for any Person for any period, the
aggregate of net income (or loss) from continuing operations of such Person and
its Subsidiaries for such period, determined on a consolidated basis in
conformity with GAAP; PROVIDED, HOWEVER, that there shall be excluded from such
net income (loss) to the extent included in the determination of Consolidated
Net Income (Loss): (a) all gains and all losses realized upon Asset Sales or
upon the sale or other disposition of any Stock of any of the Borrower's
Subsidiaries or of any Permitted Investment, (b) the net income (loss) of any
Person that is accounted for by the equity method of accounting, except to the
extent of the amount of dividends or distributions paid to the Borrower during
such period, (c) the net income (loss) of any of the Borrower's Subsidiaries to
the extent that the declaration or payment of dividends or similar distributions
is prohibited or restricted under the terms of its certificate of incorporation
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary, such exclusion under this
clause (c) to be effective for so long as such prohibition or restriction
continues, with the net income (loss) previously excluded on account of such
prohibition or restriction to be again included and to form part of
"Consolidated Net Income (Loss)" for the purpose of any determination made after
the expiration of such prohibition or restriction and (d) all other income,
expense, gain or loss from extraordinary items (including income, expense, gain
or loss excluded from "extraordinary items" in conformity with GAAP because such
income, expense, gain or loss is not "material"). Consolidated Net Income
(Loss) of the Borrower for any period shall include the net income (loss) during
such period of any Person directly or indirectly acquired by the Borrower and
shall exclude the net income (loss) during such period of any Person directly or
indirectly sold or otherwise disposed of by the Borrower.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to
any Indebtedness or Contractual Obligation of another Person, if the purpose
or intent of such Person in incurring the Contingent Obligation is to provide
assurance to the obligee of such Indebtedness or Contractual Obligation that
such Indebtedness or Contractual Obligation will be paid or discharged, or
that any agreement relating thereto will be complied with, or that any holder
of such Indebtedness or Contractual Obligation will be protected (in whole or
in part) against loss in respect thereof. Contingent Obligations of
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a Person include, without limitation, (a) the direct or indirect guarantee,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another Person and (b) any liability of such
Person for the obligation of another Person through any agreement (contingent
or otherwise) (i) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of a loan, advance, stock
purchase, capital contribution or otherwise), (ii) to maintain the solvency
or any balance sheet item, level of income or financial condition of another
Person, (iii) to make take-or-pay or similar payments, if required,
regardless of non-performance by any other party or parties to an agreement,
(iv) to purchase, sell or lease (as lessor or lessee) property, or to
purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such obligation or to assure the holder of such obligation
against loss or (v) to supply funds to or in any other manner invest in the
debtor (including to pay for property or services irrespective of whether
such property is received or such services are rendered), if in the case of
any agreement described under subclause (i), (ii), (iii), (iv) or (v) of this
sentence the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Contingent Obligation shall be equal
to the amount of the obligation so guaranteed or otherwise supported.
"CONTRACTUAL OBLIGATION" of any Person means any obligation, agreement,
undertaking or similar provision of any security issued by such Person or of any
agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or
other instrument to which such Person is a party or by which it or any of its
property is bound or to which any of its properties is subject.
"CURRENT ASSETS" means, for any Person at any date, the total consolidated
current assets of such Person and its Subsidiaries at such date, determined in
conformity with GAAP.
"CURRENT LIABILITIES" means, for any Person at any date, the total
consolidated current liabilities of such Person and its Subsidiaries at such
date, determined in conformity with GAAP, but excluding the Loans and the
current portion of any long-term debt and other interest-bearing liabilities of
such Person and its Subsidiaries.
"DEFAULT" means any event which with the passing of time or the giving of
notice or both would become an Event of Default.
"DESIGNATED DIVIDENDS" means dividends paid by the Borrower to the Parent
pursuant to Section 7.4(d)(ii).
"DOL" means the United States Department of Labor, or any successor
thereto.
"DOLLARS" and the sign "$" each mean the lawful money of the United States
of America.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" opposite its name on
Schedule I or such other office
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of such Lender as such Lender may from time to time specify to the Borrower
and the Administrative Agent.
"EBITD" means, for any Person for any period, the Consolidated Net Income
(Loss) of such Person for such period taken as a single accounting period, PLUS
the sum of the following amounts for such Person and its consolidated
Subsidiaries for such period to the extent included in the determination of such
Consolidated Net Income (Loss), without duplication: (a) depreciation expense,
(b) amortization expense and other Non-Cash Charges reducing income, (c) Net
Interest Expense and (d) total income tax expense.
"ENVIRONMENTAL LAW" has the meaning specified in Section 4.19.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
which is treated as a single employer with the Borrower or any of its
Subsidiaries in accordance with Section 414 (b), (c), (m) or (a) of the Code
other than any HMC ERISA Affiliate.
"ERISA EVENT" means (i) a Reportable Event with respect to a Title IV Plan
or a Multiemployer Plan; (ii) the withdrawal of the Borrower, any of its
Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial employer, as defined
in Section 4001(a)(2) of ERISA; (iii) the complete or partial withdrawal of the
Borrower, any of its Subsidiaries or any ERISA Affiliate from any Multiemployer
Plan; (iv) the filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Section 4041 of ERISA;
(v) the institution of proceedings to terminate a Title IV Plan or Multiemployer
Plan by the PBGC; (vi) the failure to make required contributions to a Qualified
Plan; or (vii) any other event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the office
of such Lender specified as its "Eurodollar Lending Office" below its name on
Schedule I (or, if no such office is specified, its Domestic Lending Office) or
such other office of such Lender as such Lender may from time to time specify to
the Borrower and the Administrative Agent.
"EURODOLLAR RATE" means, for any Interest Period, an interest rate per
annum equal to the rate per annum obtained by dividing (a) the rate of interest
determined by the Administrative
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Agent to be the average (rounded upward to the nearest whole multiple of 1/16
of 1% per annum, if such average is not such a multiple) of the rate per
annum at which deposits in U.S. dollars are offered by the principal office
of Citibank in London, England to prime banks in the London interbank market
at 11:00 A.M. (London time) two Business Days before the first day of such
Interest Period in an amount substantially equal to the Eurodollar Rate Loan
of Citibank during such Interest Period and for a period equal to such
Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage for such Interest Period.
"EURODOLLAR RATE LOAN" means any outstanding principal amount of the Loans
of any Lender that, for an Interest Period, bears interest at a rate determined
with reference to the Eurodollar Rate.
"EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period means the
reserve percentage applicable two Business Days before the first day of such
Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to any
other category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar Rate Loans is determined) having a term equal to
such Interest Period.
"EVENT OF DEFAULT" has the meaning specified in Section 8.1.
"EXCLUDED SUBSIDIARY" means (a) a Subsidiary of the Borrower which is
incorporated under the laws of a foreign country, and (b) Supermarket Radio
Network, Inc., a Georgia corporation.
"EXISTING CREDIT AGREEMENT" means that certain Credit Agreement dated as of
June 22, 1992, among the Borrower, the lenders party thereto, Citibank, as
Agent, and NationsBank, as Co-Agent, as amended, modified or restated from time
to time.
"FAIR MARKET VALUE" means (a) with respect to any asset (other than a
marketable security) at any date, the value of the consideration obtainable in a
sale of such asset at such date assuming a sale by a willing seller to a willing
purchaser dealing at arm's length and arranged in an orderly manner over a
reasonable period of time having regard to the nature and characteristics of
such asset or, if such asset shall have been the subject of a relatively
contemporaneous appraisal by an independent third party appraiser, the basic
assumptions underlying which have not materially changed since its date, as set
forth in such appraisal and (b) with respect to any marketable security at any
date, the closing sale price of such security on the business day (on which any
national securities exchange is open for the normal transaction of business)
next preceding such date, as appearing in any published list of any national
securities exchange or in the National Market List of the National Association
of Securities Dealers, Inc. or, if there is no such closing sale price of such
security, the final price for the purchase of such security at face value quoted
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on such business day by a financial institution of recognized standing which
regularly deals in securities of such type.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FISCAL QUARTER" means a fiscal quarter of the Borrower, which shall be a
three-month period ending on the last day of March, June, September or December.
"FISCAL YEAR" means a fiscal year of the Borrower, which shall be the
twelve-month period ending on December 31 of each year.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination except that for purposes of Article V, GAAP shall be determined on
the basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the audited financial statements referred to in
Section 4.5.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"GUARANTIES" means, collectively, the Parent Guaranty and the Subsidiary
Guaranty.
"GUARANTOR" means each of the Parent and each direct and indirect
Subsidiary of the Borrower, other than any Excluded Subsidiary.
"HMC AFFILIATE PLAN" means any employee pension benefit plan as defined in
Section 3(2) of ERISA (including any multiemployer plan as defined in Section
3(37) of ERISA) that is covered by Title IV of ERISA or subject to the minimum
funding standards of Section 412 of the Code or any group health plan as defined
in Section 5000(b)(1) of the Code maintained, contributed to, or obligated to be
contributed to by any HMC ERISA Affiliate other than Plans maintained by the
Borrower or any of its Subsidiaries.
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"HMC ERISA AFFILIATE" means any trade or business (whether or not
incorporated) other than the Borrower and its Subsidiaries which is treated as a
single employer with the Parent in accordance with Section 414(b), (c), (m) or
(a) of the Code.
"HMI" means Heritage Media, Inc., a Delaware corporation and a wholly-owned
Subsidiary of the Borrower.
"HMI NOTE" means the Note and Pledge Agreement, dated June 22, 1992,
executed by HMI in favor of the Borrower, as the same may be amended,
supplemented or otherwise modified from time to time.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money (including, without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured) or for the deferred
purchase price of property or services (but excluding trade payables, other
similar non-interest-bearing obligations and accrued liabilities incurred in the
ordinary course of business), (b) all obligations of such Person evidenced by
notes, bonds, debentures or similar instruments, (c) all indebtedness of such
Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (d) all
Capitalized Lease Obligations of such Person, (e) all Contingent Obligations of
such Person, (f) all obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any Stock of such Person, valued, in the
case of redeemable preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends, (g) all
obligations of such Person under Interest Rate Contracts, (h) all Indebtedness
referred to in clause (a), (b), (c), (d), (e), (f) or (g) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including, without
limitation, accounts and general intangibles) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness and (i) in the case of the Borrower, the Obligations.
"INDEMNITEES" has the meaning specified term in Section 10.4.
"INDENTURE" means the Indenture, dated as of June 15, 1992, between the
Borrower, the Parent, each of the Subsidiary Guarantors named therein, each of
the Future Subsidiary Guarantors named therein and the Trustee, pursuant to
which the Senior Notes were issued, as the same may be hereafter amended,
supplemented or modified from time to time to the extent permitted by this
Agreement and the Indenture.
"INTEREST PERIOD" means, in the case of any Eurodollar Rate Loan,
(i) initially, the period commencing on the date such Loan is made or on the
date of conversion of a Base Rate Loan to such Eurodollar Rate Loan and ending
one, two, three or six months thereafter (or, if deposits of
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such duration are available to each Lender, ending twelve months thereafter),
as selected by the Borrower in its Notice of Borrowing or Notice of
Conversion or Continuation given to the Administrative Agent pursuant to
Section 2.2 or 2.6 and (ii) thereafter, if such Loan is continued, in whole
or in part, as a Eurodollar Rate Loan pursuant to Section 2.6, a period
commencing on the last day of the immediately preceding Interest Period
therefor and ending one, two, three or six months thereafter (or, if deposits
of such duration are available to each Lender, ending twelve months
thereafter), as selected by the Borrower in its Notice of Conversion or
Continuation given to the Administrative Agent pursuant to Section 2.6;
PROVIDED, HOWEVER, that all of the foregoing provisions relating to Interest
Periods in respect of Eurodollar Rate Loans are subject to the following:
(A) if any Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless, with respect to a Eurodollar Rate Loan,
the result of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period shall end on
the immediately preceding Business Day;
(B) any Interest Period with respect to a Eurodollar Loan that begins
on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a calendar
month;
(C) the Borrower may not select any Interest Period which ends after
the Termination Date;
(D) the Borrower may not select any Interest Period in respect of
Loans having an aggregate amount less than $10,000,000; and
(E) there shall be outstanding at any one time no more than eight
Interest Periods in the aggregate.
"INTEREST RATE CONTRACTS" means interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate insurance
and other agreements or arrangements designed to provide protection against
fluctuations in interest rates.
"INVESTMENTS" has the meaning specified in Section 7.6.
"IRS" means the Internal Revenue Service, or any successor thereto.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other obligation, including, without
limitation, any
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conditional sale or other title retention agreement, the interest of a lessor
under a Capitalized Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, and the
filing, under the Uniform Commercial Code or comparable law of any
jurisdiction, of any financing statement naming the owner of the asset to
which much Lien relates as debtor.
"LOAN" means a Loan made by a Lender to the Borrower pursuant to
Section 2.1.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Actmedia Note,
the Guaranties, the Notes, the Collateral Agency Agreement and the Collateral
Documents.
"LOAN PARTY" means each of the Parent, the Borrower, and each Subsidiary
and Affiliate of the Borrower which executes and delivers a Loan Document.
"MAJORITY LENDERS" means, at any time, (a) Lenders holding 100% of the then
outstanding aggregate unpaid principal amount of the Loans or, if no such
principal amount is then outstanding, Lenders having 100% of the Commitments, or
(b) in the event that at the time of determination there shall be more than two
Lenders, "MAJORITY LENDERS" means Lenders holding at least 66-2/3% of the then
aggregate unpaid principal amount of the Loans or, if no such principal amount
is then outstanding, Lenders having at least 66-2/3% of the Commitments.
"MATERIAL ADVERSE CHANGE" means a material adverse change in any of (a) the
condition (financial or otherwise), business, performance, prospects, operations
or properties of the Parent, the Borrower and their Subsidiaries taken as one
enterprise from and after December 31, 1995, (b) the legality, validity or
enforceability of any Loan Document or any Related Document, (c) the fully
perfected first priority status of the Liens granted pursuant to the Collateral
Documents (subject to the Permitted Liens), (d) the ability of the Borrower to
repay the Obligations or of any Loan Party to perform its obligations hereunder
or under any other Loan Document or (e) the rights and remedies of the Lenders
or the Administrative Agent or the Documentation Agent under the Loan Documents.
"MATERIAL ADVERSE EFFECT" means an effect that would result in a Material
Adverse Change.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, and to which the Borrower, any of its Subsidiaries or any
ERISA Affiliate is making, is obligated to make, has made or been obligated to
make, contributions on behalf of participants who are or were employed by any of
them.
"NET INTEREST EXPENSE" means, for any Person for any period, gross interest
expense of such Person and its Subsidiaries, on a consolidated basis, for such
period determined in conformity with GAAP, LESS the following for such Person
and its Subsidiaries on a consolidated basin determined in conformity with GAAP:
(a) the sum of (i) interest capitalized during construction for such period,
(ii) interest income and, without duplication, payments received in
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respect of Interest Rate Contracts for such period and (iii) gains for such
period on Interest Rate contracts (to the extent not included in interest
income above), PLUS the following for such Person and its Subsidiaries on a
consolidated basis determined in conformity with GAAP (to the extent not
included in the determination of such gross interest expense): (b) the sum of
(i) losses for such period on Interest Rate Contracts and (ii) the expensing
of upfront costs or fees for such period associated with the execution and
delivery of this Agreement and with Interest Rate Contracts.
"NON-CASH CHARGES" means, for the Borrower for any period, the sum of
(a) all amounts treated as an expense for depreciation for such period PLUS
(b) all amounts treated as an expense for the amortization of leaseholds,
deferred transaction costs and intangibles of any kind, including goodwill, for
such period, and deferred expenses (including, without limitation, deferred
compensation and rent abatement not paid in cash) during such period, in each
case for the Borrower and its Subsidiaries determined on a consolidated basis in
conformity with GAAP; PROVIDED, HOWEVER, that if, for any period, the amount
treated under GAAP as an expense for the amortization of any leasehold of the
Borrower or any of its Subsidiaries is exceeded by the actual cash payment
required to maintain such leasehold for such period, such excess shall be from
Non-Cash Charges for such period.
"NOTE" means a promissory note of the Borrower payable to the order of any
Lender in a principal amount equal to the amount of such Lender's Commitment as
originally in effect, in substantially the form of Exhibit E, evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from the Loans
made by such Lender.
"NOTEHOLDERS" means the holders of the Senior Notes.
"NOTICE OF BORROWING" has the meaning specified in Section 2.2(a).
"NOTICE OF CONVERSION OR CONTINUATION" has the meaning specified in
Section 2.6.
"OBLIGATIONS" means the Loans and all other advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Administrative
Agent, the Documentation Agent, any Lender, any Affiliate of any of them, any
Indemnitee or any holder of an Interest Rate Contract set forth on Schedule III,
of every type and description, present or future, whether or not evidenced by
any note, guaranty or other instrument, arising under this Agreement, under any
other Loan Document or any Interest Rate Contract, whether or not for the
payment of money, whether arising by reason of an extension of credit, loan,
guaranty, indemnification, foreign exchange transaction or Interest Rate
Contract or in any other manner, whether direct or indirect (including, without
limitation, those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising and however acquired. The term
"Obligations" includes, without limitation, all interest, charges, expenses,
fees, attorneys' fees and disbursements and any other sum chargeable to the
Borrower under this Agreement, any other Loan Document or any Interest Rate
Contract. The parties hereto agree that the Interest Rate Contracts set forth
on Schedule III are entered into pursuant to this Agreement.
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"OTHER TAXES" has the meaning specified in Section 2.13(b).
"PARENT" has the meaning specified in the first recital.
"PARENT GUARANTY" means a guaranty, in substantially the form of Exhibit D,
executed by the Parent, as such guaranty may be amended, supplemented or
otherwise modified from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PENSION PLAN" means an employee pension benefit plan, as defined in
Section (3)(2) of ERISA (other than a Multiemployer Plan), which is not an
individual account plan, as defined in Section 3(34) of ERISA, and which the
Borrower, any of its Subsidiaries or, if a Title IV Plan, any ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"PERMIT" means any permit, approval, authorization, license, variance or
permission required from a Governmental Authority under an applicable
Requirement of Law.
"PERMITTED INVESTMENT" means an Investment permitted pursuant to
Section 7.6(d).
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a Governmental Authority.
"PLAN" means an employee benefit plan, as defined in Section 3(3) of ERISA,
which the Borrower or any of its Subsidiaries maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or were
employed by any of them.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated June 22, 1992,
executed by the Parent, the Borrower and each of the direct and indirect
Subsidiaries of the Borrower listed on the signature pages thereof, the
Documentation Agent, the Trustee and the Collateral Agent, as such agreement may
be amended, supplemented or modified from time to time in accordance with the
terms thereof.
"PLEDGED COLLATERAL" means, collectively, those items defined as "Pledged
Collateral" in Section 2(a) of the Pledge Agreement and Section 4 of the HMI
Note.
"PLEDGED NOTES" means, collectively, those items defined as "Pledged Notes"
in Section 2(a) of the Pledge Agreement and Section 4 of the HMI Note.
"PLEDGED SHARES" means, collectively, those items defined as "Pledged
Shares" in Section 2(a) of the Pledge Agreement and Section 4 of the HMI Note.
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"PROJECTIONS" means those financial projections delivered to the
Administrative Agent and the Lenders by the Borrower in connection with the
financings contemplated by this Agreement.
"QUALIFIED PLAN" means an employee pension benefit plan, as defined in
Section 3(2) of ERISA, which is intended to be tax-qualified under Section
401(a) of the Code, and which the Borrower, any of its Subsidiaries or any ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"RATABLE PORTION" or "RATABLY" means, with respect to any Lender, the
quotient obtained by dividing the Commitment of such Lender by the aggregate
Commitments of all Lenders.
"REAL ESTATE" means all of those plots, pieces or parcels of land now owned
or hereafter acquired by the Borrower or any of its Subsidiaries.
"REGISTER" has the meaning specified in Section 10.6(c).
"RELATED DOCUMENTS" means the Indenture, the Senior Notes and each other
material document and instrument entered into with respect to any of the
foregoing.
"RELATED PERSON" means (a) any Affiliate of the Borrower, (b) any
individual or entity who directly or indirectly holds 10% or more of any class
of Stock of the Borrower, (c) any relative of such individual by blood, marriage
or adoption not more remote than first cousin and (d) any officer or director of
the Borrower.
"REPORTABLE EVENT" means any of the events described in Section 4043(b)(1),
(2), (3), (5), (6), (8) or (9) of ERISA.
"REQUIREMENT OF LAW" means, as to any Person, the charter and bylaws or
other organizational or governing documents of such Person, and all federal,
state and local laws, rules and regulations, including, without limitation,
ERISA and Environmental Laws, and all orders, judgments, decrees or other
determinations of any Governmental Authority or arbitrator, applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"RESPONSIBLE OFFICER" means, with respect to any Person, any of the
executive officers of such Person.
"SECURED PARTIES" means the Lenders, the Administrative Agent, the
Documentation Agent, the Collateral Agent, the Trustee, the Noteholders and any
other Person to which Obligations are owed.
"SENIOR NOTES" means the 11% Senior Secured Notes Due 2002 of the Borrower,
issued pursuant to the Indenture.
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"SENIOR SUBORDINATED NOTES" means the 11% Senior Subordinated Notes due
2002 of the Parent, issued pursuant to that certain Indenture, dated as of
October 1, 1992, between the Parent and the Bank of Montreal Trust Company, as
Trustee.
"SOLVENT" means, with respect to any Person, that the value of the assets
of such Person (both at fair value and present fair saleable value) is, on the
date of determination, greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of such Person as of such date and
that, as of such date, such Person is able to pay all liabilities of such Person
as such liabilities mature and does not have unreasonably small capital. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"SPILL" has the meaning specified in Section 4.19.
"STOCK" means shares of capital stock, beneficial or partnership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or non-voting, and includes,
without limitation, common stock and preferred stock and warrants, options or
other rights to purchase or subscribe for any of the foregoing.
"STOCK PAYMENT" means, with respect to any Person, any dividend payment or
other distribution of assets, properties, cash, rights, warrants, equity
interests, obligations or securities made by such Person on account of its Stock
or any purchase, redemption, defeasance or other acquisition for value or other
payment made by such Person in respect of its Stock (other than, in each of the
foregoing cases, solely through the issuance of such Person's own capital
stock), now or hereafter outstanding, or any management incentive or similar fee
payment to a shareholder of such Person in its capacity as a shareholder.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership or other business entity of which an aggregate of 50% or more of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors, managers, trustees or other controlling persons, or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned by such Person and/or one or more Subsidiaries of such Person
(irrespective of whether, at the time, Stock of any other class or classes of
such entity shall have or might have voting power by reason of the happening of
any contingency).
"SUBSIDIARY GUARANTY" means a guaranty, in substantially the form of
Exhibit C, executed by each direct and indirect Subsidiary of the Borrower other
than Excluded Subsidiaries, as such guaranty may be amended, supplemented or
otherwise modified from time to time.
"TAX AFFILIATE" means, as to any Person, (a) any Subsidiary of such Person
and (b) any Affiliate of such Person with which such Person files or is eligible
to file consolidated, combined or unitary tax returns.
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"TAXES" has the meaning specified in Section 2.13(a).
"TERMINATION DATE" means the date of termination in whole of the Commitment
pursuant to Section 2.4 or 8.1.
"TITLE IV PLAN" means a Pension Plan, other than a Multiemployer Plan,
which is covered by Title IV of ERISA.
"TOTAL DEBT" means, for the Borrower at any date, the aggregate
Indebtedness of the Borrower and its Subsidiaries for borrowed money (including
any overdue interest on such Indebtedness but excluding any accrued but not
overdue interest on such Indebtedness) on a consolidated basis, at such date.
"TOTAL DEBT TO EBITD RATIO" means, for the Borrower and its Subsidiaries on
a consolidated basis at any date, the ratio of Total Debt on such date to EBITD
of the Borrower and its Subsidiaries on a consolidated basis for the twelve-
month period ending on such date.
"TOTAL DEBT SERVICE RATIO" means, with respect to the Borrower and its
Subsidiaries on a consolidated basis for any period, the ratio of (a) EBITD of
the Borrower and its Subsidiaries on a consolidated basis for such period less
the sum of (i) taxes payable by the Borrower and its Subsidiaries with respect
to such period (excluding taxes payable with respect to items excluded from
Consolidated Net Income (Loss) pursuant to clauses (a) and (d) of the definition
of Consolidated Net Income (Loss)) and (ii) Capital Expenditures of the Borrower
and its Subsidiaries actually made during such period to (b) the sum of (i) the
aggregate amount of principal and interest due and payable by the Borrower and
its Subsidiaries with respect to Total Debt during such period and
(ii) Designated Dividends paid by the Borrower during such period.
"TOTAL INTEREST COVERAGE RATIO" means, for the Borrower and its
Subsidiaries on a consolidated basis for any period, the ratio of (a) EBITD of
the Borrower and its Subsidiaries on a consolidated basis for such period to
(b) the sum of (i) the aggregate amount of interest due and payable by the
Borrower and its Subsidiaries with respect to Total Debt during such period and
(ii) Designated Dividends paid by the Borrower during such period.
"TRUSTEE" means Bankers Trust Company, in its capacity as trustee under the
Indenture, or any successor thereto.
"UNFUNDED PENSION LIABILITY" means, as to the Borrower at any time, the
aggregate amount, if any, of the sum of (a) the amount by which the present
value of all accrued benefits under each Title IV Plan of the Borrower, any
of its Subsidiaries or any ERISA Affiliate exceeds the fair market value of
all assets of such Title IV Plan allocable to such benefits in accordance
with Title IV of ERISA, all determined as of the most recent valuation date
for each such Title IV Plan using the actuarial assumptions in effect under
such Title IV Plan and (b) for a period of five years following a transaction
reasonably likely to be covered by Section 4069 of ERISA, the
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liabilities (whether or not accrued) that could be avoided by the Borrower,
any of its Subsidiaries or any ERISA Affiliate a" a result of such
transaction.
"WITHDRAWAL LIABILITY" means, as to the Borrower at any time, the aggregate
amount of the liabilities of the Borrower, any of its Subsidiaries or any ERISA
Affiliate pursuant to Section 4201 of ERISA, and any increase in contributions
required to be made pursuant to Section 4243 of ERISA, with respect to all
Multiemployer Plans.
"WORKING CAPITAL" means, for any Person at any date, the amount by which
the Current Assets of such Person at such date exceeds the Current Liabilities
of such Person at such date.
1.2. COMPUTATION OF TIME PERIODS. In this Agreement, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding" and the word "through" means "to and including."
1.3. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in accordance with GAAP.
1.4. CERTAIN TERMS. (a) The words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole, and not to any
particular Article, Section, subsection or clause in this Agreement. References
herein to an Exhibit, Schedule, Article, Section, subsection or clause refer to
the appropriate Exhibit, Schedule to or Article, Section, subsection or clause
in this Agreement.
(b) The terms Lender, Administrative Agent and Documentation Agent include
their respective successors and the term Lender includes each assignee of any
Lender who becomes a party hereto pursuant to Section 10.6.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
2.1. THE LOANS. On the terms and subject to the conditions contained in
this Agreement, each Lender severally agrees to make loans (each a "Loan") to
the Borrower from time to time on any Business Day during the period from the
date hereof until the Borrowing Termination Date in an aggregate amount not to
exceed at any time outstanding such Lender's Commitment. Amounts repaid
pursuant to Section 2.5 may not be reborrowed. The Loans of each Lender shall
be evidenced by the Note payable to the order of such Lender.
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2.2. MAKING THE LOANS. (a) Each Borrowing shall be made upon receipt of a
notice, given by the Borrower to the Administrative Agent not later than 11:00
A.M. (New York City time) on the third (or, in the case of the initial Borrowing
on the Closing Date or any Borrowing consisting only of Base Rate Loans, the
first) Business Day prior to the date of the proposed Borrowing. Each such
notice (a "Notice of Borrowing") shall be by telecopy, telex or cable, confirmed
immediately in a manually signed writing in substantially the form of Exhibit A,
specifying therein (i) the date of such proposed Borrowing, (ii) the aggregate
amount of such proposed Borrowing, (iii) the amount thereof, if any, requested
to be Eurodollar Rate Loans and (iv) the initial Interest Period or Periods for
such Eurodollar Rate Loans. The Loans shall be made as Base Rate Loans unless
(subject to Section 2.10) the Notice of Borrowing specifies that all or a pro
rata portion thereof shall be Eurodollar Rate Loans; PROVIDED, HOWEVER, that the
aggregate of the Eurodollar Rate Loans for each Interest Period must be in an
amount of not less than $5,000,000 or an integral multiple of $500,000 in excess
thereof.
(b) The Administrative Agent shall give to each Lender prompt notice of
the Administrative Agent's receipt of a Notice of Borrowing and, if Eurodollar
Rate Loans are properly requested in such Notice of Borrowing, the applicable
interest rate under Section 2.7(b). Each Lender shall, before 12:00 Noon (New
York City time) on the date of the proposed Borrowing, make available for the
account of its Applicable Lending Office to the Administrative Agent at its
address referred to in Section 10.2, in immediately available funds, such
Lender's Ratable Portion of such proposed Borrowing. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Administrative Agent will make such funds
available to the Borrower at the Administrative Agent's aforesaid address.
(c) Each Borrowing consisting solely of Base Rate Loans shall be in an
aggregate amount of not less than $1,000,000 or an integral multiple of $100,000
in excess thereof.
(d) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any proposed Borrowing which the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Loans, the Borrower
shall indemnify each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure to fulfill on or before the date specified in
such Notice of Borrowing for such proposed Borrowing the applicable conditions
set forth in Article III, including, without limitation, any loss (including
loss of anticipated net profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to fund any Eurodollar Rate Loan to be made by such Lender as part of such
proposed Borrowing when such Eurodollar Rate Loan, as a result of such failure,
is not made on such date.
(e) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any proposed Borrowing that such Lender will not
make available to the Administrative Agent such Lender's Ratable Portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
Ratable Portion available to the Administrative Agent on the date
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of such Borrowing in accordance with this Section 2.2 and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If and to the extent that such Lender
shall not have so made such Ratable Portion available to the Administrative
Agent, such Lender and the Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Rate. If such Lender shall repay to
the Administrative Agent such corresponding amount, such amount so repaid
shall constitute such Lender's Loan as part of such Borrowing for purposes of
this Agreement. If the Borrower shall repay to the Administrative Agent such
corresponding amount, such payment shall not relieve such Lender of any
obligation it may have to the Borrower hereunder.
(f) The failure of any Lender to make the Loan to be made by it as part of
any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the date of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on the date of any Borrowing.
2.3. FEES. (a) The Borrower agrees to pay to each Lender a fee on the
average daily Available Commitment of such Lender from the Closing Date until
the Termination Date at the rate equal to the rate set forth below opposite the
Total Debt to EBITD Ratio which is in effect for each period. Such rate will be
determined quarterly by the Administrative Agent upon receipt of a certificate
of the Borrower setting forth the Total Debt to EBITD Ratio (and its
computation) as of the last day of the most recent Fiscal Quarter then ended and
signed by a Responsible Officer of the Borrower pursuant to Section 6.11(a) or
6.11(b) or, if the Administrative Agent shall not have received such a
certificate pursuant to Section 6.11(a) or 6.11(b) with respect to the last day
of the most recent Fiscal Quarter then ended, such rate shall be equal to .375%
until such time as such certificate is received. All such determinations shall
be effective on the fifth Business Day following receipt of such certificate of
the Borrower or, if no such certificate shall be received in accordance with
Section 6.11(a) or 6.11(b), as the case may be, then on the fifth day following
expiration of the period during which receipt should have occurred under
Section 6.11(a) or 6.11(b), as the case may be.
Total Debt to EBITD Ratio Applicable Fee
------------------------- ---------------
Greater than or equal to 3.5 to 1.0 .375%
Less than 3.5 to 1.0 .250%
(b) The Borrower has agreed to pay to Administrative Agent an
administrative agent fee, the amount and dates of payment of which are embodied
in a separate agreement between the Borrower and Administrative Agent.
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(c) The Borrower has agreed to pay to each of Citibank and the
Documentation Agent additional fees, the amount and dates of payment of which
are embodied in a separate agreement between the Borrower and Citibank and in a
separate agreement between the Borrower and the Documentation Agent.
2.4. REDUCTION AND TERMINATION OF THE COMMITMENTS. (a) The Borrower shall
have the right, upon at least three Business Days' prior notice to the
Administrative Agent, to terminate in whole or permanently reduce ratably in
part the unused portions of the respective Commitment of the Lenders; PROVIDED,
HOWEVER, that each partial reduction shall be in the aggregate amount of not
less than $5,000,000 or an integral multiple of $500,000 in excess thereof.
(b) Each Lender's Commitment shall be automatically and permanently
reduced by the amount of any Loans made by such Lender and repaid by the
Borrower.
(c) On December 31, 1997, each Lender's Commitment shall terminate.
2.5. REPAYMENTS AND PREPAYMENTS. (a) The Borrower shall have no right to
prepay the principal amount of any Loan other than as provided in this
Section 2.5.
(b) The Borrower may, upon at least three (and, in the case of Base Rate
Loans, one) Business Days' prior notice to the Administrative Agent stating the
proposed date and aggregate principal amount of the prepayment, and if such
notice is given the Borrower shall, prepay the outstanding principal amount of
the Loans in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid; PROVIDED, HOWEVER, that
any prepayment of any Eurodollar Rate Loan shall be made on, and only on, the
last day of an Interest Period for such Loan; and, PROVIDED, FURTHER, that each
partial prepayment shall be in an aggregate principal amount not less than
$500,000 or integral multiples of $100,000 in excess thereof.
(c) The Borrower shall repay all outstanding Loans in full, together with
accrued interest to the date of such repayment on the principal amount repaid,
on the Termination Date.
(d) All payments of principal or interest received by the Administrative
Agent from the Collateral Agent in respect of the Pledged Notes shall be
credited by the Administrative Agent as follows: first, to the payment of
interest and fees, if any, then due with respect to the Loans; and next to the
repayment of the Loans as set forth in Section 2.5(b).
2.6. CONVERSION/CONTINUATION OPTION. The Borrower may elect (a) at any
time to convert Base Rate Loans or any portion thereof to Eurodollar Rate
Loans, or (b) at the end of any Interest Period with respect thereto, to
convert Eurodollar Rate Loans or any portion thereof into Base Rate Loans, or
to continue such Eurodollar Rate Loans or any portion thereof for an
additional Interest Period; PROVIDED, HOWEVER, that the aggregate of the
Eurodollar Loans for each Interest Period therefor must be in the amount of
$5,000,000 or an integral multiple of $500,000
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in excess thereof. Each conversion or continuation shall be allocated among
the Loans of each Lender in accordance with its Ratable Portion of the amount
so converted or continued. Each such election shall be in substantially the
form of Exhibit B (a "Notice of Conversion or Continuation") and shall be
made by giving the Administrative Agent at least three Business Days' prior
written notice thereof in the event of a conversion to or continuation of a
Eurodollar Rate Loan specifying (i) the amount and type of conversion or
continuation, (ii) in the case of a conversion to or a continuation of
Eurodollar Rate Loans, the Interest Period therefor and (iii) in the case of
a conversion, the date of conversion (which date shall be a Business Day and,
if a conversion from Eurodollar Rate Loans, shall also be the last day of the
Interest Period therefor). The Administrative Agent shall promptly notify
each Lender of its receipt of a Notice of Conversion or Continuation and of
the contents thereof. Notwithstanding the foregoing, no conversion in whole
or in part of Base Rate Loans to Eurodollar Rate Loans, and no continuation
in whole or in part of Eurodollar Rate Loans upon the expiration of any
Interest Period therefor, shall be permitted at any time at which a Default
or an Event of Default shall have occurred and be continuing. If, within the
time period required under the terms of this Section 2.6, the Administrative
Agent does not receive a Notice of Conversion or Continuation from the
Borrower containing a permitted election to continue any Eurodollar Rate
Loans for an additional Interest Period or to convert any such Loans, then,
upon the expiration of the Interest Period therefor, such Loans will be
automatically converted to Base Rate Loans. Each Notice of Conversion or
Continuation shall be irrevocable.
2.7. INTEREST. The Borrower shall pay interest on the unpaid principal
amount of each Loan from and including the date thereof until the principal
amount thereof shall be paid in full, at the following rates per annum:
(a) BASE RATE LOANS. For Base Rate Loans, at a rate per annum equal
at all times to the Applicable Base Rate Margin PLUS the Base Rate in
effect from time to time, payable quarterly in arrears on the first day of
each January, April, July and October, on the Termination Date and on the
date any Base Rate Loan is converted or paid in full; PROVIDED, HOWEVER,
that during the continuance of an Event of Default, all Base Rate Loans
shall bear interest, payable on demand, at a rate per annum equal at all
times to 2% per annum above the Base Rate plus the Applicable Base Rate
Margin in effect from time to time.
(b) EURODOLLAR RATE LOANS. For Eurodollar Rate Loans, at a rate per
annum equal at all times during the applicable Interest Period for each
Eurodollar Rate Loan to the sum of the Eurodollar Rate on the first day of
such Interest Period PLUS the Applicable Eurodollar Rate Margin in effect
from time to time during such Interest Period, payable on the last day of
such Interest Period, on the Termination Date and, if such Interest Period
has a duration of more than three months, on each day during such Interest
Period which occurs every three months from the first day of such Interest
Period; PROVIDED, HOWEVER, that during the continuance of an Event of
Default, all Eurodollar Rate Loans shall bear interest, payable on demand,
at a rate per annum equal at all times to 2% per
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annum above the Eurodollar Rate plus the Applicable Eurodollar Rate Margin
in effect from time to time until the maturity of the Loans or the end of
such Interest Period, whichever occurs first, and thereafter at 2% per
annum above the Base Rate plus the Applicable Base Rate Margin in effect
from time to time.
2.8. INTEREST RATE DETERMINATION AND PROTECTION. (a) The Eurodollar Rate
for each Interest Period for Eurodollar Rate Loans shall be determined by the
Administrative Agent on the basis of applicable rates furnished to and received
by the Administrative Agent two Business Days prior to the first day of such
Interest Period. Citibank agrees to obtain, and to furnish to the
Administrative Agent if Citibank is not then the Administrative Agent, timely
information for the purpose of determining each Eurodollar Rate. If Citibank
shall not obtain or furnish such timely information to the Administrative Agent
for the purpose of determining any such interest rate, (i) the Administrative
Agent shall forthwith notify the Borrower and the Lenders that such interest
rate cannot be determined, (ii) each Eurodollar Rate Loan will automatically, on
the last day of the then existing Interest Period therefor, convert into a Base
Rate Loan and (iii) the obligation of the Lenders to make, and the right of the
Borrower to select, Eurodollar Rate Loans shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
(b) The Administrative Agent shall give prompt notice to the Borrower, the
Documentation Agent and the Lenders of the applicable interest rate determined
by the Administrative Agent for purposes of Section 2.7.
(c) If, with respect to Eurodollar Rate Loans, any Lender shall notify the
Administrative Agent that the Eurodollar Rate for any Interest Period therefor
will not adequately reflect the cost to such Lender of making such Loans or
funding or maintaining their respective Eurodollar Rate Loans for such Interest
Period, the Administrative Agent shall forthwith so notify the Borrower, the
Documentation Agent and the Lenders, whereupon (i) each Eurodollar Loan will
automatically, on the last day of the then existing Interest Period therefor,
convert into a Base Rate Loan and (ii) the obligation of the Lenders to make,
and the right of the Borrower to select, Eurodollar Rate Loans or to convert
Base Rate Loans into Eurodollar Rate Loans shall be suspended until the
Administrative Agent shall notify the Borrower that such Lenders have determined
that the circumstances causing such suspension no longer exist.
2.9. INCREASED COSTS. If, due to either (a) the introduction of or any
change (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) in or in the
interpretation of any law or regulation or (b) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining any
Eurodollar Rate Loans, then the Borrower shall from time to time, upon demand
by such Lender (with a copy of such demand to the Administrative Agent and
the Documentation Agent), pay to the Administrative Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such
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increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower, the Administrative Agent and the Documentation
Agent by such Lender, shall be conclusive and binding for all purposes,
absent manifest error. If the Borrower so notifies the Administrative Agent
within five Business Days after any Lender notifies the Borrower of any
increased cost pursuant to the foregoing provisions of this Section 2.9, the
Borrower may either (i) prepay in full all Eurodollar Rate Loans, as the case
may be, of such Lender then outstanding in accordance with Section 2.5(b)
and, additionally, reimburse such Lender for such increased cost in
accordance with this Section 2.9 or (ii) convert all Eurodollar Rate Loans,
as the case may be, of all Lenders then outstanding into Base Rate or
Eurodollar Rate Loans, as the case may be, in accordance with Section 2.6
and, additionally, reimburse such Lender for such increased cost in
accordance with this Section 2.9.
2.10. ILLEGALITY. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender or its
Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to fund
or maintain Eurodollar Rate Loans, then, on notice thereof and demand therefor
by such Lender to the Borrower through the Administrative Agent, (a) the
obligation of such Lender to make or to continue Eurodollar Rate Loans and to
convert Base Rate Loans into Eurodollar Rate Loans shall terminate and (b) the
Borrower shall forthwith prepay in full all Eurodollar Rate Loans of such Lender
then outstanding, together with interest accrued thereon, unless the Borrower,
within five Business Days of such notice and demand, converts all Eurodollar
Rate Loans of all Lenders then outstanding into Base Rate Loans.
2.11. CAPITAL ADEQUACY. (a) If either (i) the introduction of, or any
change in, or in the interpretation of, or compliance with, any law or
regulation or (ii) compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
affects or would affect the amount of capital required or expected to be
maintained by any Lender or any corporation controlling any Lender and such
Lender reasonably determines that such amount is based upon the existence of
such Lender's Commitment and Loans and other commitments and loans of this type,
then, upon demand by such Lender (with a copy of such demand to the
Administrative Agent and the Documentation Agent), the Borrower shall pay to the
Administrative Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender's Commitment or Loans. A certificate as to such amount"
submitted to the Borrower, the Administrative Agent and the Documentation Agent
by such Lender shall be conclusive and binding for all purposes absent manifest
error.
(b) Any Lender claiming any additional amounts payable pursuant to
Section 2.9, 2.10, 2.11(a) or 2.13 shall use its best efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional
amounts which
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may thereafter accrue and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender. The Borrower shall have
the right to replace any Lender claiming any additional amounts pursuant to
Sections 2.9, 2.10, 2.11(a), 2.13 or 10.4(c) or any Lender which has
delivered to the Administrative Agent and the Documentation Agent the notice
specified in Section 2.8(c) by delivering a notice to such Lender, with a
copy to the Administrative Agent and the Documentation Agent, of the identity
of the Lender or other Person which will replace such Lender and the date on
which such replacement will take place; PROVIDED, HOWEVER, that such
replacement Lender shall satisfy the requirements of Section 10.6; and
PROVIDED, FURTHER, that such replacement shall not relieve the Borrower of
its obligations to pay such amounts for all periods prior to such replacement
or costs incurred as a result of such replacement.
2.12. PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make each
payment hereunder and under the Notes not later than 11:00 A.M. (New York City
time) on the day when due, in Dollars, to the Administrative Agent at its
address referred to in Section 10.2 in immediately available Dollars without
set-off or counterclaim. The Administrative Agent will promptly thereafter
cause to be distributed like funds relating to the payment of principal or
interest or fees (other than amounts payable pursuant to Section 2.9, 2.10, 2.11
or 2.13) to the Lenders, in accordance with their respective Ratable Portions,
for the account of their respective Applicable Lending Offices, and like funds
relating to the payment of any other amount payable to any Lender to such Lender
for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Payment received by the
Administrative Agent after 11:00 A.M. (New York City time) shall be deemed to be
received on the next Business Day.
(b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder, to charge from time
to time against any or all of the Borrower's accounts with such Lender any
amount so due.
(c) All computations of interest based on the Base Rate and of fees shall
be made by the Administrative Agent on the basis of a year of 365 or 366 days,
as the case may be, and all computations of interest based on the Eurodollar
Rate or the Federal Funds Rate shall be made by the Administrative Agent on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest and fees are payable. Each determination by the
Administrative Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fee, as the case may be;
PROVIDED, HOWEVER, that if such extension would cause payment of interest on or
principal of any Eurodollar Rate Loan to be made in the next calendar month,
such payment shall be made on the next preceding Business Day.
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(e) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Lenders hereunder
that the Borrower will not make such payment in full, the Administrative Agent
may assume that the Borrower has made such payment in full to the Administrative
Agent on such date and the Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent the Borrower
shall not have so made such payment in full to the Administrative Agent, each
Lender shall repay to the Administrative Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Administrative Agent, at the Federal Funds Rate.
2.13. TAXES. (a) Any and all payments by the Borrower hereunder or under
the Notes shall be made, in accordance with Section 2.12, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings and all liabilities with respect thereto,
excluding, (i) in the case of each Lender and the Administrative Agent, taxes
measured by its net income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender, the Administrative Agent or
the Documentation Agent (as the case may be) is organized or any political
subdivision thereof, (ii) in the case of each Lender, taxes measured by its net
income, and franchise taxes imposed on it, by the jurisdiction of such Lender's
Applicable Lending Office or any political subdivision thereof and (iii) in the
case of each Lender organized under the laws of a jurisdiction outside the
United States, United States federal withholding tax payable with respect to
payments by the Borrower which would not have been imposed had such Lender, to
the extent then required thereunder, delivered to the Borrower and the
Administrative Agent the forms prescribed by Section 2.13(f) (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender, the Administrative Agent or the Documentation Agent,
(A) the sum payable shall be increased as may be necessary so that after making
all required deductions (including, without limitation, deductions applicable to
additional sums payable under this Section 2.13) such Lender, the Administrative
Agent or the Documentation Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (B) the
Borrower shall make such deductions, (C) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other authority in accordance with
applicable law and (D) the Borrower shall deliver to the Administrative Agent
evidence of such payment to the relevant taxation or other authority.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction which arise from any payment made hereunder or
under the Notes from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or under the Notes (hereinafter referred to as
"Other Taxes").
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(c) The Borrower will indemnify each Lender, the Administrative Agent
and the Documentation Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.13) paid by such Lender,
the Administrative Agent or the Documentation Agent (as the case may be) and any
liability (including, without limitation, for penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. This indemnification shall be made
within 30 days from the date such Lender, the Administrative Agent or the
Documentation Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes, the Borrower will furnish to the Administrative Agent, at its address
referred to in Section 10.2, the original or a certified copy of a receipt
evidencing payment thereof. If no Taxes are payable in respect of any payment
hereunder made (i) by or on behalf of the Borrower other than by a "United
States person" within the meaning of Section 7701(a)(30) of the Code or (ii) out
of funds from an account outside the United States, the Borrower will furnish to
the Administrative Agent a certificate from each appropriate taxing authority,
or an opinion of counsel acceptable to the Administrative Agent, in either case
stating that such payment is exempt from or not subject to Taxes.
(e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.13 shall survive the payment in full of principal and interest
hereunder and under the Notes.
(f) Prior to the Closing Date in the case of each Lender, and on the
date of the Assignment and Acceptance pursuant to which it becomes a Lender in
the case of each other Lender, and from time to time thereafter if either
required by law due to a change in circumstances or reasonably requested by the
Borrower or the Administrative Agent (unless such Lender is unable to do so by
reason of a change in law (including, without limitation, any statute, treaty,
ruling, determination or regulation) occurring subsequent to the Closing Date or
date of Assignment and Acceptance, as the case may be), each Lender organized
under the laws of a jurisdiction outside the United States shall provide the
Administrative Agent and the Borrower with an IRS Form 4224 or Form 1001 or
other applicable form, certificate or document prescribed by the IRS certifying
as to such Lender's entitlement to full exemption from United States withholding
tax with respect to all payments to be made to ouch Lender hereunder and under
the Notes. Unless the Borrower and the Administrative Agent have received forms
or other documents satisfactory to them indicating that payments hereunder or
under any Note are not Subject to United States withholding tax, the Borrower or
the Administrative Agent shall, in the case of payments to or for any Lender
organized under the laws of a jurisdiction outside the United States, withhold
taxes from such payments at the applicable statutory rate, or at a rate reduced
by an applicable tax treaty (provided that the Borrower and the Administrative
Agent have received forms or other documents satisfactory to them indicating
that such reduced rate applies).
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2.14. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans made by it (other than pursuant to
Section 2.9, 2.10, 2.11 or 2.13) in excess of its Ratable Portion of payments on
account of the Loans obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in the Loans as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; PROVIDED, HOWEVER, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (a) the
amount of such Lender's required repayment to (b) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.14 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
ARTICLE III
CONDITIONS OF LENDING
3.1. CONDITIONS PRECEDENT TO INITIAL LOANS. The obligation of each
Lender to make its initial Loan is subject to satisfaction of the conditions
precedent that the Agents shall have received, on the Closing Date, the
following, each dated the Closing Date unless otherwise indicated, in form and
substance satisfactory to the Agents and each Lender and (except for the Notes)
in sufficient copies for each Lender:
(a) The Notes payable to the order of each Lender.
(b) Certified copies of (i) the resolutions of the Board of Directors
of each Loan Party (or a duly authorized committee thereof) approving each Loan
Document and each Related Document to which it is a party and (ii) all documents
evidencing other necessary corporate action and required governmental and third
party approvals, licenses and consents with respect to each Loan Document and
each Related Document and the transactions contemplated thereby.
(c) A copy of the articles or certificate of incorporation of each Loan
Party, certified as of a date within 90 days prior to the Closing Date by the
Secretary of State of the state of incorporation of such Loan Party, together
with certificates of such official attesting to the good standing of each such
Loan Party, and a copy of the certificate of incorporation and the By-Laws of
each Loan Party certified as of the Closing Date by the Secretary or an
Assistant Secretary of such Loan Party.
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(d) A certificate of the Secretary or an Assistant Secretary of each
Loan Party certifying the names and true signatures of each officer of such Loan
Party who has been authorized to execute and deliver any Loan Document or other
document required hereunder to be executed and delivered by or on behalf of such
Loan Party.
(e) Each of the Guaranties, duly executed by the Guarantor party
thereto.
(f) An amendment to the Pledge Agreement, duly executed by each party
thereto, causing the Obligations to be secured thereby, together with evidence
that all action necessary or, in the opinion of the Documentation Agent,
desirable to perfect and protect the Liens created by the Pledge Agreement
(including, without limitation, the filing of financing statements under the
UCC) has been taken.
(g) An amendment to the Collateral Agency Agreement, duly executed by
the Documentation Agent, the Collateral Agent and the Trustee, causing the
Collateral Agent to act in such capacity with respect to the Obligations as
secured by the Pledge Agreement.
(h) Opinions of Crouch & Hallett, counsel to the Loan Parties, and of
Wayne Kern, counsel to the Loan Parties, in substantially the form of Exhibits G
and H, respectively, and as to such other matters as any Lender through the
Documentation Agent may reasonably request.
(i) A certificate of the chief financial officer of each of the Parent
and the Borrower stating that each such Person and its Subsidiaries, on a
consolidated basis, is Solvent after giving effect to the initial Loans, the
application of the proceeds thereof in accordance with Section 6.10,
respectively, and the payment of all estimated legal, investment banking,
accounting and other fees related hereto and thereto.
(j) A certificate in substantially the form of Exhibit J, signed by a
Responsible Officer of the Borrower, to the effect that the conditions specified
in Sections 3.2 and 3.3 have been met.
(k) A duly executed copy of a letter from KPMG Peat Marwick (the
"Auditor") in substantially the form of Exhibit I.
(l) Such additional documents, information and materials as any Lender,
through the Administrative Agent, may reasonably request.
3.2. ADDITIONAL CONDITIONS PRECEDENT TO INITIAL LOANS. The obligation
of each Lender to make its initial Loan is subject to the further conditions
precedent that:
(a) On the Closing Date, the following statements shall be true:
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(i) All necessary governmental and third party approvals
required to be obtained by any Loan Party in connection with the
transactions contemplated hereby have been obtained and remain in effect;
(ii) There exists no judgment, order, injunction or other
restraint prohibiting or in the reasonable judgment of the Majority Lenders
imposing materially adverse conditions upon the consummation of the
transactions contemplated hereby or by any of the Related Documents; and
(iii) There exists no claim, action, suit, investigation or
proceeding (including, without limitation, shareholder or derivative
litigation) pending or threatened in any court or before any arbitrator or
Governmental Authority which relates to the transactions contemplated
hereby or by any of the Related Documents or which has any reasonable
likelihood of having a Material Adverse Effect.
(b) All costs and accrued and unpaid fees and expenses (including,
without limitation, legal fees and expenses) required to be paid to the Lenders
on or before the Closing Date, including, without limitation, those referred to
in Sections 2.3 and 10.4, to the extent then due and payable, shall have been
paid.
(c) There shall not have occurred any Material Adverse Change since
December 31, 1995, and no Lender, in its sole judgment reasonably exercised,
shall have determined that there has occurred any adverse change which such
Lender deems material in the financial or capital markets (including, without
limitation, the market for senior debt financings) generally, since April 30,
1996.
(d) Nothing contained in any public disclosure made by the Parent, the
Borrower or any of their respective Subsidiaries after April 30, 1996 or in any
information disclosed to the Lenders by the Parent, the Borrower or any of their
respective Subsidiaries after such date shall lead the Administrative Agent, the
Documentation Agent or any Lender to determine, and none of the Administrative
Agent, the Documentation Agent or any Lender shall have become aware of any fact
or condition not disclosed to them prior to April 30, 1996 which shall lead the
Administrative Agent, the Documentation Agent or any Lender to determine, that
the condition (financial or otherwise), operations, performance, properties or
prospects of the Parent, the Borrower and the Borrower's Subsidiaries, taken as
a whole, are different in any material and adverse respect from that information
which was delivered by the Borrower to the Administrative Agent, the
Documentation Agent or any Lender not later than such date.
(e) No Lender, in its sole judgment exercised reasonably, shall have
determined that there is any claim, action, suit, investigation, litigation or
proceeding (including, without limitation, shareholder or derivative litigation)
pending or threatened in any court or before any arbitrator or Governmental
Authority which has any reasonable likelihood of having a material
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adverse effect on the condition (financial or otherwise), operations, business,
properties or prospects of the Parent, the Borrower and the Borrower's
Subsidiaries, taken as a whole.
(f) Each Lender shall be satisfied, in its sole judgment exercised
reasonably, with the corporate, capital, legal and management structure of the
Borrower and its Subsidiaries, and shall be satisfied, in its sole judgment
exercised reasonably, with the nature and status of all Contractual Obligations,
securities, labor, tax, ERISA, employee benefit, environmental, health and
safety matters, in each case, involving or affecting the Borrower or any of its
Subsidiaries.
3.3. CONDITIONS PRECEDENT TO EACH LOAN. The obligation of each Lender
to make any Loan (including the Loan being made by such lender on the Closing
Date) shall be subject to the further conditions precedent that:
(a) The following statements shall be true and correct on the date of
such Loan, before and after giving effect thereto and to the application of the
proceeds therefrom (and the acceptance by the Borrower of the proceeds of such
Loan shall constitute a representation and warranty by the Borrower that on the
date of such Loan such statements are true):
(i) The representations and warranties of the Borrower contained
in Article IV and of each Loan Party in the other Loan Documents (other
than those representations and warranties which specifically relate to an
earlier date) are true and correct on and as of such date as though made on
and as of such date;
(ii) No Default or Event of Default is continuing or would result
from any Loan being made on such date; and
(iii) The making of the Loans on such date does not violate any
Requirement of Law and is not enjoined, temporarily, preliminarily or
permanently.
(b) The Administrative Agent shall have received such additional
documents, information and materials as any Lender, through the Administrative
Agent, may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders, the Administrative Agent and the Documentation Agent
to enter into this Agreement, the Borrower represents and warrants to the
Lenders, the Administrative Agent and the Documentation Agent that:
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4.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Borrower and each of
its Subsidiaries (a) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation; (b) is
duly qualified as a foreign corporation and in good standing under the laws of
each jurisdiction in which the failure so to qualify has a reasonable likelihood
of having a Material Adverse Effect; (c) has all requisite corporate power and
authority and the legal right to own, pledge, mortgage and operate its
properties, to lease the property it operates under lease and to conduct its
business in all material respects as now or currently proposed to be conducted;
(d) is in compliance with its certificate of incorporation and by-laws; (e) is
in compliance with all other applicable Requirements of Law except such
non-compliance as would not have a Material Adverse Effect; and (f) has all
necessary licenses, permits, consents and approvals from or by, has made all
necessary filings with, and has given all necessary notices to, each
Governmental Authority having jurisdiction, to the extent required for such
ownership, operation and conduct, except for licenses, permits, consents or
approvals which can be obtained by the taking of ministerial action to secure
the grant or transfer thereof or which the failure to have would not have any
reasonable likelihood of having a Material Adverse Effect.
4.2. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. (a) The
execution, delivery and performance by the Borrower and its Subsidiaries of each
Loan Document to which it is a party and the consummation of the transactions
related to the financing contemplated hereby:
(i) are within such Person's corporate powers;
(ii) have been duly authorized by all necessary corporate action,
including, without limitation, the consent of shareholders where required;
(iii) do not and will not (A) contravene the Borrower's or any of
its Subsidiaries' respective certificate of incorporation or by-laws or
other comparable governing documents, (B) violate any other applicable
Requirement of Law (including, without limitation, Regulations G, T, U and
X of the Board of Governors of the Federal Reserve System) or any order or
decree of any Governmental Authority or arbitrator, (C) conflict with or
result in the breach of, or constitute a default under, or result in or
permit the termination or acceleration of, any Contractual Obligation of
the Borrower or any of its Subsidiaries other than conflicts, breaches,
defaults, terminations or accelerations that, individually or in the
aggregate, could not have any reasonable likelihood of having a Material
Adverse Effect, (D) require or permit the acceleration of any Indebtedness
of the Borrower or any of its Subsidiaries or (E) result in the creation or
imposition of any Lien upon any of the property of the Borrower or any of
its Subsidiaries, other than those in favor of the Collateral Agent on
behalf of and for the ratable benefit of the Secured Parties and the
Noteholders: and
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(iv) do not require the consent of, authorization by, approval
of, notice to or filing or registration with, any Governmental Authority or
any other Person, other than (A) those which have been obtained and copies
of which have been delivered to the Administrative Agent pursuant to this
Agreement, each of which is in full force and effect, (B) those which, if
not obtained, could not have any reasonable likelihood of having a Material
Adverse Effect and (C) as may be required by the Communications Act of
1934, as heretofore or hereafter amended from time to time or any successor
thereto, and any regulations and legally enforceable guidance promulgated
thereunder in connection with the transfer of ownership or control of radio
and television broadcasting stations or as a result of the execution of the
Loan Documents and the Indenture to the extent that such a filing is
required under 47 C.F.R. Section 73.3613 (1991).
(b) This Agreement has been, and each of the other Loan Documents to
which the Borrower or its Subsidiaries is a party will have been, upon delivery
thereof pursuant to this Agreement, duly executed and delivered by each such
Person. This Agreement is, and the other Loan Documents to which the Borrower
or its Subsidiaries is a party will be, when delivered hereunder, the legal,
valid and binding obligation of each such Person, enforceable against it in
accordance with its terms.
(c) The execution, delivery and performance by the Borrower and its
Subsidiaries of each Related Document to which it is a party and the
consummation of the transactions contemplated thereby:
(i) are within such Person's respective corporate powers:
(ii) at the Closing Date will have been duly authorized by all
necessary corporate action, including the consent of shareholders where
required;
(iii) do not and will not (A) contravene the Borrower's or any of
its Subsidiaries' respective certificate of incorporation or by-laws or
other comparable governing documents, (B) violate any other Requirement of
Law or any order or decree of any Governmental Authority or arbitrator,
(C) conflict with or result in the breach of, or constitute a default
under, or result in or permit the termination or acceleration of, any
Contractual Obligation of the Borrower or any of its Subsidiaries other
than breaches, defaults, terminations or accelerations that, individually
or in the aggregate, could not have any reasonable likelihood of having a
Material Adverse Effect, (D) require or permit the acceleration of any
Indebtedness of the Borrower or any of its Subsidiaries or (E) result in
the creation or imposition of any Lien upon any of the property of the
Borrower or any of its Subsidiaries, other than those in favor of the
Collateral Agent on behalf of and for the ratable benefit of the Secured
Parties and the Noteholders; and
(iv) do not require the consent of, authorization by, approval
of, notice to or filing or registration with, any Governmental Authority or
any other Person, other than
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those required as a result of the execution of the Loan Document. and the
Indenture to the extent that such a filing is required under 47 C.F.R.
Section 73.3613 (1991) and those which have been obtained or, if not
obtained, could not have any reasonable likelihood of having a Material
Adverse Effect.
(d) Each of the Related Documents to which the Borrower or its
Subsidiaries is a party has been duly executed and delivered by each such Person
and is the legal, valid and binding obligation of such Person, enforceable
against it in accordance with its terms.
4.3. TAXES. (a) All federal, and all material state and local, tax
returns, reports and statements required to be filed by the Borrower or any of
its Tax Affiliates have been filed with the appropriate Governmental Authorities
in all jurisdictions in which such returns, reports and statements are required
to be filed, and all taxes, charges and other impositions due and payable have
been timely paid prior to the date on which any fine, penalty, interest, late
charge or loss may be added thereto for non-payment thereof except where such
non-payment would not, individually or in the aggregate, have a Material Adverse
Effect. Except for immaterial bookkeeping errors, proper and accurate amounts
have been withheld by the Borrower and each of its Tax Affiliates from their
respective employees for all periods in full and complete compliance with the
tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective governmental agencies. Except as disclosed on
Schedule 4.3, as of the Closing Date, none of the Borrower or any of its Tax
Affiliates has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any charges other than
agreements or documents executed prior to such Person's becoming a Tax
Affiliate. None of the Borrower or any of its Subsidiaries has any obligation
under any written tax sharing agreement other than that to which the Majority
Lenders have consented.
(b) As of the Closing Date, (i) no property owned by the Borrower or
any of its Tax Affiliates is property which the Borrower or any of its Tax
Affiliates is or will be required to treat as being owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986, or is "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code, (ii) none of the Borrower or any of its Tax
Affiliates has filed a consent pursuant to Section 341(f) of the Code or agreed
to have Section 341(f)(2) of the Code apply to any disposition of subsection (f)
assets (as such term is defined in Section 341(f)(4) of the Code) owned by the
Borrower or any of its Tax Affiliates and (iii) none of the Borrower or any of
its Tax Affiliates has agreed to or is required to make any adjustment pursuant
to Section 481(a) of the Code by reason of a change in accounting method
initiated by the Borrower or any of its Tax Affiliates and none of the Borrower
or any of its Tax Affiliates has any knowledge that the IRS has proposed any
such adjustment or change in accounting method.
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4.4. FULL DISCLOSURE. No written statement prepared or furnished by or
on behalf of the Borrower or any of its Affiliates in connection with any of the
Loan Documents or the Related Documents or the consummation of the transactions
contemplated thereby, and no financial statement delivered pursuant hereto or
thereto, contained, as of the date such statement was furnished or delivered,
any untrue statement of a material fact or omitted to state as of the date such
statement was furnished or delivered, a material fact necessary to make the
statements contained herein or therein not misleading. There is no fact known
to the Borrower which the Borrower has not disclosed to the Lenders which is
material to the financial condition, business, properties or prospects of the
Borrower and its Subsidiaries taken as one enterprise.
4.5. FINANCIAL MATTERS. (a) The consolidated balance sheet of the
Parent, the Borrower and its Subsidiaries as at December 31, 1995, and the
related consolidated statements of income, retained earnings and cash flow of
the Parent, the Borrower and its Subsidiaries for the fiscal year then ended,
certified by KPMG Peat Marwick, and the consolidated balance sheets of the
Parent and its Subsidiaries as of March 31, 1996, and the related consolidated
statements of income, retained earnings and cash flow of the Parent and its
Subsidiaries for the three months then ended, certified by the chief financial
officer of the Parent, copies of which have been furnished to each Lender,
fairly present, subject, in the case of said balance sheets as of March 31,
1996, and said statements of income, retained earnings and cash flow for the
three months then ended, to year-end audit adjustments, the consolidated
financial condition of the Parent and its Subsidiaries as at such dates and the
consolidated results of the operations of the Parent and its Subsidiaries for
the periods ended on such dates, all in conformity with GAAP.
(b) Since December 31, 1995, there has been no development which has
had or is likely to have a material adverse effect on the condition (financial
or otherwise), performance, property or prospects of the Parent, the Borrower
and the Borrower's Subsidiaries, taken as a single enterprise.
(c) Neither the Borrower nor any of its Subsidiaries had, at
December 31, 1995, any obligation, contingent liability or liability for taxes,
long-term leases or unusual forward or long-term commitment which is not
reflected on the balance sheet at such date referred to in subsection (a) above
or in the notes thereto and which would have a Material Adverse Effect.
(d) The unaudited pro forma consolidated balance sheet of the Parent,
the Borrower and its consolidated Subsidiaries, certified by the chief financial
officer of the Borrower as having been prepared in conformity with GAAP (the
"Pro Forma Balance Sheet"), a copy of which has been delivered to each Lender,
has been prepared as of December 31, 1995, adjusted to give effect to the
financing contemplated hereby and fees and expenses payable in connection
herewith, reflects, as of such date, on a pro forma basis, the consolidated
financial condition of the Borrower and its Subsidiaries assuming the financings
contemplated hereby had actually occurred on such date, and the Projections and
assumptions expressed therein were reasonably based on the information available
to the Borrower at the time so furnished and on the Closing Date.
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4.6. LITIGATION. Except as set forth on Schedule 4.6, there are no
pending or, to the knowledge of the Borrower, threatened actions, investigations
or proceedings to which the Borrower or any of its Subsidiaries is or could
reasonably be expected to become a party or, to the Borrower's knowledge,
affecting the Borrower or any of its Subsidiaries before any court, Governmental
Authority or arbitrator with respect to which there is a reasonable likelihood
of an adverse determination and that, if adversely determined, are reasonably
likely to have a Material Adverse Effect. The performance of any action by any
Loan Party required or contemplated by any of the Loan Documents or the Related
Documents is not restrained or enjoined (either temporarily, preliminarily or
permanently), and no material adverse condition has been imposed by any
Governmental Authority or arbitrator upon any of the foregoing transactions.
4.7. MARGIN REGULATIONS. (a) No proceeds of any Borrowing will be used
to acquire any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, in contravention
of Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System.
(b) The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Borrowing will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock in contravention of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
4.8. OWNERSHIP OF BORROWER; SUBSIDIARIES. (a) The authorized Stock of
the Borrower consists of 10,000 shares of common stock, $1.00 par value per
share, of which 100 shares are issued and outstanding. All of the outstanding
Stock of the Borrower has been validly issued, is fully paid and non-assessable
and is owned beneficially and of record by the Parent, free and clear of all
Liens other than the Liens granted to the Collateral Agent pursuant to the
Pledge Agreement. No authorized but unissued and no treasury shares of Stock of
the Borrower are subject to any option, warrant, right of conversion or purchase
of any similar right. There are no agreements or understandings with respect to
the voting, sale or transfer of any shares of Stock of the Borrower.
(b) Set forth on Schedule 4.8 (as such Schedule may be amended by the
Borrower from time to time) is a complete and accurate list showing all
Subsidiaries of the Borrower and, as to each such Subsidiary, the jurisdiction
of its incorporation, the number of shares of each class of Stock authorized,
and the number outstanding, on the date hereof and the percentage of the
outstanding shares of each such class owned (directly or indirectly) by the
Borrower. Except as set forth on Schedule 4.8 (as such Schedule may be amended
by the Borrower from time to time), and except in connection with Permitted
Investments, no Stock of any Subsidiary of the Borrower is subject to any
outstanding option, warrant, right of conversion or purchase or any similar
right. All of the outstanding Stock of each such Subsidiary has been validly
issued, is fully paid and nonassessable and is owned by the Borrower, free and
clear of all Liens other than Liens granted
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to the Collateral Agent pursuant to the Collateral Documents. Neither the
Borrower nor any such Subsidiary is a party to, or has knowledge of, any
agreement restricting the transfer or hypothecation of any shares of any such
Subsidiary's Stock, other than the Loan Documents and the Indenture. As of the
Closing Date, the Borrower does not own or hold, directly or indirectly, any
Stock or equity security of, or any equity interest in, any Person other than
such Subsidiaries.
4.9. ERISA. (a) Schedule 4.9 (as such Schedule may be amended by the
Borrower from time to time) lists all Plans subject to Section 412 of the Code,
Multiemployer Plans, or welfare benefit plans, as defined in Section 3(1) of
ERISA (the "Welfare Benefit Plans"), providing retiree benefits maintained or
contributed to by the Borrower and its Subsidiaries and all Qualified Plans
maintained or contributed to by any ERISA Affiliate, and separately identifies
the Title IV Plans, Multiemployer Plans and Welfare Benefit Plans.
(b) Except as set forth on Schedule 4.9 (as such Schedule may be
amended by the Borrower from time to time), each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the Code, and the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the Code, and to the best knowledge of the Borrower
nothing has occurred which would cause the loss of such qualification or
tax-exempt status.
(c) Each Plan is in compliance in all material respects with applicable
provisions of ERISA and the Code, including the filing of reports required under
the Code or ERISA which are true and correct in all material respects as of the
date filed, and with respect to each Plan, other than a Qualified Plan, all
required contributions and benefits in excess of $50,000 have been paid in
accordance with the provisions of each such Plan.
(d) None of the Borrower nor any of its Subsidiaries or any ERISA
Affiliate, with respect to any Qualified Plan, has failed to make any
contribution or pay any amount due as required by Section 412 of the Code or
Section 302 of ERISA or the terms of any such Qualified Plan.
(e) Except as set forth on Schedule 4.9 (as such Schedule may be
amended by the Borrower from time to time), no Title IV Plan has any Unfunded
Pension Liability.
(f) With respect to all Plans which are Welfare Benefit Plans providing
retiree benefits or are not funded totally through insurance, the present value
of future anticipated expenses, net of applicable insurance or assets, pursuant
to the latest actuarial projections of liabilities does not exceed $500,000, and
copies of such latest projections have been provided to the Lenders.
(g) With respect to Pension Plans, other than Qualified Plans, the
present value of the liabilities, net of applicable insurance or assets, for
current participants thereunder using PBGC interest assumptions does not exceed
$500,000.
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(h) Except as set forth on Schedule 4.9 (as such Schedule may be
amended by the Borrower from time to time), there has been no and nor is there
reasonably expected to occur any ERISA Event or event described in Section 4068
of ERISA with respect to any Title IV Plan.
(i) Except as set forth on Schedule 4.9 (as such Schedule may be
amended by the Borrower from time to time), there are no pending or, to the
knowledge of Borrower or any of its Subsidiaries, threatened claims, actions or
lawsuits (other than claims for benefits in the normal course), asserted or
instituted against (i) any Plan or its assets, (ii) any fiduciary with respect
to any Plan or (iii) the Borrower, any of its Subsidiaries or any ERISA
Affiliate with respect to any Plan.
(j) Except as set forth on Schedule 4.9 (as such Schedule may be
amended by the Borrower from time to time), none of the Borrower, any of its
Subsidiaries or any ERISA Affiliate has incurred or has any reasonable
likelihood of incurring any Withdrawal Liability under Section 4201 of ERISA as
a result of a complete or partial withdrawal from a Multiemployer Plan (and no
event has occurred which, with the giving of notice under Section 4219 or ERISA,
would result in any such liability).
(k) Except as set forth on Schedule 4.9 (as such Schedule may be
amended by the Borrower from time to time), within the last five years none of
the Borrower, any of its Subsidiaries or any ERISA Affiliate has engaged in a
transaction within the meaning of Section 4069 of ERISA.
(l) Except as set forth on Schedule 4.9 (as such Schedule may be
amended by the Borrower from time to time), no Plan which is a Welfare Benefit
Plan provides for continuing benefits or coverage for any participant or any
beneficiary of a participant after such participant's termination of employment
(except as may be required by Section 4980B of the Code and at the sole expense
of the participant or the beneficiary of the participant) which would result in
a liability in an amount which would have a Material Adverse Effect. The
Borrower, each of its Subsidiaries and each ERISA Affiliate has complied with
the notice and continuation coverage requirements of Section 4980B of the Code
and the regulations thereunder, except where there is no reasonable likelihood
of a Material Adverse Effect as the result of such non-compliance, individually
or in the aggregate.
(m) Except as set forth on Schedule 4.9 (as such Schedule may be
amended by the Borrower from time to time), neither the Borrower nor any of its
Subsidiaries has engaged in a prohibited transaction, as defined in Section 4975
of the Code or Section 406 of ERISA, in connection with any Plan, which would
subject or has any reasonable likelihood of subjecting the Borrower or any of
its Subsidiaries (after giving effect to any exemption) to a material tax on
prohibited transactions imposed by Section 4975 of the Code or any other
material liability.
4.10. LIENS. There are no Liens of any nature whatsoever on any
properties of the Borrower or any of its Subsidiaries other than those permitted
by Section 7.1. The Liens granted
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by the Borrower and its Subsidiaries to the Collateral Agent on behalf and for
the ratable benefit of the Secured Parties and the Noteholders pursuant to the
Collateral Documents are fully perfected first priority Liens in and to the
Collateral.
4.11. RELATED DOCUMENTS. None of the Related Documents has been amended
or modified in any material respect and no material provision therein has been
waived, and each of the representations and warranties therein is true and
correct in all material respects as of the date such representations and
warranties are made or deemed to be made and no default or event which with the
giving of notice or lapse of time or both would be a default has occurred
thereunder other than such breaches and defaults which would not, directly or
indirectly, have, individually or in the aggregate, a Material Adverse Effect.
4.12. NO BURDENSOME RESTRICTIONS; NO DEFAULTS. (a) Except as set forth
on Schedule 4.12, neither the Borrower nor any of its Subsidiaries is (i) a
party to any Contractual Obligation which is reasonably likely to have a
Material Adverse Effect or the performance of which by any thereof, either
unconditionally or upon the happening of an event, will result in the creation
of a Lien on the property or assets of any thereof except as permitted by
Section 7.1 or (ii) subject to any charter or corporate restriction which could
have a Material Adverse Effect.
(b) None of the Borrower, its Subsidiaries or, to the knowledge of the
Borrower, any other party is in default under or with respect to any Contractual
Obligation other than those defaults which, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(c) After application of the proceeds of the Loans made on the Closing
Date, no Event of Default or Default has occurred and is continuing.
(d) As of the Closing Date, no Requirement of Law could reasonably be
expected to have a Material Adverse Effect.
(e) None of the Subsidiaries (other than Excluded Subsidiaries) of the
Borrower is subject to any restriction or limitation on its ability to declare
or make any dividend payment or other distribution on account of any shares of
any class of its Stock or on its ability to purchase, redeem or otherwise
acquire for value or make any payment in respect of any such shares or any
shareholder rights.
4.13. NO OTHER VENTURES. Except as set forth on Schedule 4.13 or as a
result of Permitted Investments, neither the Borrower nor any of its
Subsidiaries is engaged in any joint venture or partnership with any other
Person.
4.14. INVESTMENT COMPANY ACT. The Borrower is not an "investment
company" or "promoter" or "principal underwriter" for, or "controlled" by, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended. The making of the Loans
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by the Lenders, the application of the proceeds and repayment thereof by the
Borrower and the consummation of the transactions contemplated by the Loan
Documents will not violate any provision of such Act or any rule, regulation or
order issued by the Securities and Exchange Commission thereunder.
4.15. INSURANCE. All policies of insurance of any kind or nature owned
by or issued to the Borrower or any of its Subsidiaries are in full force and
effect and, as of any date, are of a nature and provide such coverage as is
customarily carried by companies of the size and character of such Person at
such date and which the Borrower deems adequate to protect against material
losses.
4.16. LABOR MATTERS. There are no strikes, other labor disputes or
grievances pending against the Borrower or any of its Subsidiaries or, to the
knowledge of the Borrower, threatened which could have a Material Adverse
Effect. All material payments due from the Borrower or its Subsidiaries
pursuant to the provisions of any collective bargaining agreement have been paid
or accrued as a liability on the books of the Borrower or its Subsidiaries, to
the extent required by GAAP.
4.17. FORCE MAJEURE. Neither the business nor the properties of the
Borrower or any of its Subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) which has any reasonable likelihood of
having a Material Adverse Effect.
4.18. USE OF PROCEEDS. The proceeds of the Loans are being or will be
used by the Borrower solely to purchase Senior Notes and for the payment of
related costs, fees and expenses.
4.19. ENVIRONMENTAL MATTERS. Except as set forth on Schedule 4.19, all
real property owned or leased by the Borrower or any of its Subsidiaries has, at
all times during any such Person's tenancy, been free of contamination from any
substance or material currently identified as being toxic or hazardous pursuant
to any Federal, state or local statue, rule or regulation (collectively, the
"Environmental Laws"), including any asbestos, PCB, radioactive substance,
methane, volatile hydrocarbons, industrial solvents or any other material or
substance which has in the past or which is reasonably likely in the future to
cause or constitute a health, safety or environmental hazard to any Person or
property that could have a Material Adverse Effect. Neither the Borrower nor
any of its Subsidiaries has caused or suffered to occur any discharge, spillage,
uncontrolled loss, seepage or filtration of oil or petroleum or chemical liquids
or solids, liquid or gaseous products, hazardous waste, or hazardous substance
(a "Spill") at, under or within any real property owned or leased by any such
Person that could have a Material Adverse Effect. Neither the Borrower nor any
of its Subsidiaries is involved in operations which could lead to the imposition
of any liability or Lien on any such Person or any owner of the premises
occupied by any such Person under any Environmental Law that could have a
Material Adverse Effect nor has
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any such Person permitted any tenant or occupant of such premises to engage in
any such activity that could have a Material Adverse Effect.
4.20. TRANSACTION COSTS AND FEES. The Borrower has previously delivered
to the Lenders a reasonable estimate of all anticipated costs, fees and expenses
of the Loan Parties and their Subsidiaries in connection with the financings
contemplated hereby.
4.21. INTELLECTUAL PROPERTY. The Borrower and its Subsidiaries own or
license or otherwise have the right to use all licenses, permits, patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, copyright applications, franchises, authorizations and other
intellectual property rights that are necessary for the operations of their
respective businesses, except where the failure to so own or license or have the
right to use would not have a Material Adverse Effect, without material
infringement upon or conflict with the rights of any other Person with respect
thereto, including, without limitation, all trade names associated with any
private label brands of any Loan Party or any of their respective Subsidiaries.
To the best knowledge of the Borrower, except as set forth on Schedule 4.21, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by any Loan
Party or any of their respective Subsidiaries infringes upon or conflicts with
any rights owned by any other Person, and no claim or litigation regarding any
of the foregoing is pending or threatened other than infringements or conflicts
which would have no reasonable likelihood, individually or in the aggregate, of
having a Material Adverse Effect. No patent, invention, device, application,
principle, statute, law, rule, regulation, standard or code is pending or, to
the knowledge of the Borrower, proposed, which has any reasonable likelihood of
having a Material Adverse Effect.
4.22. TITLE. (a) The Borrower and its Subsidiaries own good and
marketable title to all of the Real Estate purported to be owned by them, which
Real Estate is at the date hereof described in Schedule 4.22(a), and good title
to, or valid leasehold interests in, all other properties and assets purported
to be owned by the Borrower or any of its Subsidiaries, including, without
limitation, all property reflected in the latest balance sheet referred to in
Section 4.5(a), and none of such properties and assets, including, without
limitation, the Real Estate, is subject to any Lien, except Liens permitted
hereunder. The Borrower and its Subsidiaries have received all deeds,
assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents, and have duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect the Borrower's and its Subsidiaries' right, title and interest in and to
all such property.
(b) All real property leased at the date hereof by the Borrower or any
of its Subsidiaries is listed on Schedule 4.22(b), setting forth information
regarding the commencement date, termination date, renewal options (if any) and
annual base rents for the years 1992 and 1993. Each of such leases is valid and
enforceable in accordance with its terms and is in full force and effect except
for such invalidity or unenforceability as would not, in the aggregate, have a
Material Adverse Effect. As of the Closing Date, neither the Borrower nor any
of its Subsidiaries
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nor, to the knowledge of the Borrower, any other party to any such lease is in
default of its obligations thereunder or has delivered or received any notice of
default under any such lease, nor has any event occurred which, with the giving
of notice, the passage of time or both, would constitute a default under any
such lease, except for defaults or events identified on Schedule 4.22(b) or
defaults which would not in the aggregate have a Material Adverse Effect.
(c) Except in connection with transactions permitted hereunder, neither
the Borrower nor any of its Subsidiaries owns or holds, or is obligated under or
a party to, any option, right of first refusal or other contractual right to
purchase, acquire, sell, assign or dispose of any real property owned or leased
by the Borrower or any of its Subsidiaries.
(d) Except as set forth on Schedule 4.22(d), neither the Borrower nor
any of its Subsidiaries has received any notice, nor has any knowledge, of any
pending, threatened or contemplated condemnation proceeding affecting any real
property owned or leased by the Borrower or any of its Subsidiaries or any part
thereof other than proceedings initiated following the Closing Date which,
individually or in the aggregate, have no reasonable likelihood of having a
Material Adverse Effect.
(e) No portion of any real property owned or leased by the Borrower or
any of its Subsidiaries has, as of the Closing Date, suffered any material
damage by fire or other casualty loss which has not heretofore been completely
repaired and restored to its original condition other than damages or losses
occurring following the Closing Date which, individually or in the aggregate,
have no reasonable likelihood of having a Material Adverse Effect.
4.23. CERTAIN INDEBTEDNESS. Schedule 4.23 separately identifies, as of
the Closing Date, all Indebtedness of the Borrower and its Subsidiaries which is
either (a) for borrowed money, (b) incurred outside of the ordinary course of
the business in a manner inconsistent with past practice or (c) material to the
financial condition, business, operations or prospects of the Borrower or such
Subsidiary, $1,000,000 being hereby deemed material for purposes of this
Section 4.23.
4.24. RESTRICTED PAYMENTS. Except as set forth in Schedule 4.24 and
except for transactions entered into following the Closing Date and otherwise
permitted hereunder, since December 31, 1995, (a) the Borrower has not declared
or made any dividend payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares of any class of their
respective Stock, (b) the Borrower nor any of its Subsidiaries has made any
payment or distribution on account of any Indebtedness for or in respect of
borrowed money (other than the making of regularly scheduled interest payments
and payments under Indebtedness owed to the Borrower or its Subsidiaries by
Subsidiaries of the Borrower), (c) the Borrower has not purchased, redeemed or
otherwise acquired for value or made any payment in respect of any of its Stock
or Stock Equivalents and (d) neither the Borrower nor any of its Subsidiaries
has purchased, redeemed, prepaid, defeased or otherwise acquired for value any
Indebtedness for or in respect of borrowed money.
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ARTICLE V
FINANCIAL COVENANTS
From and after the Closing Date and as long as any of the Obligations or
the Commitment remain outstanding, unless the Majority Lenders otherwise consent
in writing:
5.1. TOTAL DEBT TO EBITD RATIO. The Borrower shall maintain a ratio of
Total Debt on the last day of each Fiscal Quarter set forth below to EBITD of
the Borrower for the 12 months ending on the last day of such Fiscal Quarter not
in excess of the ratio set forth below for such Fiscal Quarter:
Fiscal Quarter Ending On Maximum Ratio
------------------------ -------------
June 30, 1996 4.25 to 1
September 30, 1996 3.90 to 1
December 31, 1996 3.60 to 1
March 31, 1997 3.60 to 1
June 30, 1997 3.60 to 1
September 30, 1997 3.30 to 1
December 31, 1997 3.10 to 1
5.2. TOTAL INTEREST COVERAGE RATIO. The Borrower shall maintain, for
the twelve-month period ending on the last day of each Fiscal Quarter set forth
below, a Total Interest Coverage Ratio not less than the ratio set forth below
for such Fiscal Quarter:
Fiscal Quarter Ending On Minimum Ratio
------------------------ -------------
June 30, 1996 1.95 to 1
September 30, 1996 1.95 to 1
December 31, 1996 2.00 to 1
March 31, 1997 2.00 to 1
June 30, 1997 2.00 to 1
September 30, 1997 2.25 to 1
December 31, 1997 2.50 to 1
5.3. TOTAL DEBT SERVICE RATIO. The Borrower shall maintain, for the
twelve-month period ending on the last day of each Fiscal Quarter until the
Termination Date, a Total Debt Service Ratio of not less than 1.10 to 1 for each
such Fiscal Quarter.
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5.4. CAPITAL EXPENDITURES. The Borrower shall not, and shall not permit
any of its Subsidiaries to, make Capital Expenditures, in aggregate amounts, in
excess of $23,000,000 during its Fiscal Year ending December 31, 1996, and
$23,000,000 during its Fiscal Year ending December 31, 1997; PROVIDED, HOWEVER,
that the Borrower and its Subsidiaries may carry forward the amount of any
Capital Expenditures permitted to be made in any Fiscal Year but not made in
such Fiscal Year to the following Fiscal Year, and, if such carry-forward is
made, Capital Expenditures made in such following Fiscal Year shall be applied
first against amounts for such following Fiscal Year and then against amounts so
carried forward from the previous Fiscal Year, except that no amount of Capital
Expenditures permitted to be carried forward pursuant to this PROVISO may be
carried forward more than one Fiscal Year.
ARTICLE VI
ADDITIONAL AFFIRMATIVE COVENANTS
As long as any of the Obligations or the Commitment remain outstanding,
unless the Majority Lenders otherwise consent in writing:
6.1. COMPLIANCE WITH LAWS, ETC. The Borrower shall comply, and shall
cause each of its Subsidiaries to comply, with all Requirements of Law,
Contractual Obligations, commitments, instruments, licenses, permits and
franchises, including all Permits, except for such non-compliance as would not
have a Material Adverse Effect.
6.2. CONDUCT OF BUSINESS. The Borrower shall (a) use, and cause each of
its Subsidiaries to use, its reasonable efforts, in the ordinary course and
consistent with past practice, to preserve its business and the goodwill and
business of the customers, advertisers, suppliers and others having business
relations with the Borrower or any of its Subsidiaries and (b) preserve, and
cause each of its Subsidiaries to preserve, all registered patents, trademarks,
trade names, copyrights and service marks with respect to its business except
where the failure to so preserve would not have a Material Adverse Effect.
6.3. PAYMENT OF TAXES, ETC. The Borrower shall pay and discharge, and
cause each of its Subsidiaries to pay and discharge, before the same shall
become delinquent, all lawful claims, taxes, assessments and governmental
charges or levies, except where nonpayment would not, individually or in the
aggregate, have a Material Adverse Effect.
6.4. MAINTENANCE OF INSURANCE. The Borrower shall maintain, and cause
each of its Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower or such Subsidiary
operates. The Borrower shall furnish to the Lenders from time to time such
information as may be requested as to such insurance.
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6.5. PRESERVATION OF CORPORATE EXISTENCE, ETC. The Borrower shall
preserve and maintain, and cause each of its Subsidiaries to preserve and
maintain, its corporate existence, rights (charter and statutory) and
franchises, except, in the case of franchises and foreign qualifications to do
business, where failure to do so would not have a Material Adverse Effect.
6.6. ACCESS. The Borrower shall, at any reasonable time and from time
to time, permit the Administrative Agent, the Documentation Agent or any of the
Lenders or any agents or representatives thereof, to (a) examine and make copies
of and abstracts from the records and books of account of the Borrower and each
of its Subsidiaries, (b) visit the properties of the Borrower and each of its
Subsidiaries, (c) discuss the affairs, finances and accounts of the Borrower and
each of its Subsidiaries with any of their respective officers or directors and
(d) communicate directly with the Borrower 'a independent certified public
accountants. The Borrower, by its execution of this Agreement, authorizes its
independent certified public accountants to disclose to the Administrative
Agent, the Documentation Agent or any Lender any and all financial statements
and other information of any kind, including, without limitation, copies of any
management letter, or the substance of any oral information that such
accountants may have with respect to the business, financial condition, results
of operations or other affairs of the Borrower or any of its Subsidiaries.
6.7. KEEPING OF BOOKS. The Borrower shall keep, and cause each of its
Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in conformity with GAAP.
6.8. MAINTENANCE OF PROPERTIES, ETC. The Borrower shall maintain and
preserve, and cause each of its Subsidiaries to maintain and preserve, all of
its material properties which are used or useful or necessary in the conduct of
its business in good working order and condition.
6.9. PERFORMANCE AND COMPLIANCE WITH OTHER COVENANTS. The Borrower
shall perform, observe and comply with, and cause each of its Subsidiaries to
perform, observe and comply with, in all material respects, all the terms,
covenants and conditions required to be performed and observed by it under the
Related Documents and its other Contractual Obligations (including, without
limitation, to pay all rent and other charges payable under any lease), and do,
and cause its Subsidiaries to do, all things necessary to preserve and to keep
unimpaired its rights under such Contractual Obligations, where failure to do so
in any of the foregoing cases would have a Material Adverse Effect.
6.10. APPLICATION OF PROCEEDS. The Borrower shall use the entire amount
of the proceeds of the Loans as provided in Section 4.18; PROVIDED, HOWEVER,
that none of the Senior Notes may be purchased for an amount in excess of 110%
of the principal amount thereof.
6.11. FINANCIAL STATEMENTS. The Borrower shall furnish to the Lenders:
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(a) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year, consolidated
balance sheets of each of the Parent and the Borrower as of the end of such
quarter and consolidated statements of income, retained earnings and cash flow
of each of the Parent and the Borrower for the period commencing at the end of
the previous Fiscal Year and ending with the end of such Fiscal Quarter,
certified by the chief financial officer of the Parent and the Borrower as
having been prepared in conformity with GAAP, together with (i) certificates of
such officers stating that no Default or Event of Default has occurred and is
continuing or, if a Default or an Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which the Parent
or the Borrower proposes to take with respect thereto, (ii) a schedule in form
satisfactory to the Administrative Agent and each Lender of the computations
used by the Borrower in determining compliance with all financial covenants
contained herein, (iii) a schedule of dividends paid by the Borrower to the
Parent during such Fiscal Quarter, including a schedule of Designated Dividends,
(iv) a schedule of Permitted Investments made by the Borrower and its
Subsidiaries during such Fiscal Quarter and (v) a schedule for the Applicable
Base Rate Margin and Applicable Eurodollar Rate Margin for the next Fiscal
Quarter;
(b) as soon as available and in any event within 120 days after the end
of each Fiscal Year, consolidated balance sheets of each of the Parent and the
Borrower as of the end of such year and consolidated statements of income,
retained earnings and cash flow of each of the Parent and the Borrower for the
period commencing at the end of the previous Fiscal Year and ending with the end
of such Fiscal Year, certified by KPMG Peat Marwick or other nationally
recognized independent public accountants acceptable to the Majority Lenders,
together with (i) a certificate of such accounting firm stating that, in the
course of the regular audit of the business of the Parent, the Borrower and the
Borrower's Subsidiaries, which audit was conducted by such accounting firm in
accordance with generally accepted auditing standards, such accounting firm has
obtained no knowledge that a Default or Event of Default has occurred and is
continuing, or, if in the opinion of such accounting firm, a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof
together with a statement by the chief financial officer of the Parent and of
the Borrower as to the action which the Parent or the Borrower proposes to take
with respect thereto, (ii) a schedule in form satisfactory to the Administrative
Agent and each Lender of the computations used by such accountants in
determining, as of the end of such Fiscal Year, the Borrower's compliance with
all financial covenants contained herein, (iii) a schedule of dividends paid by
the Borrower to the Parent during such Fiscal Year, including a schedule of
Designated Dividends, (iv) a schedule of Permitted Investments made by the
Borrower and its Subsidiaries during such Fiscal Year and (v) a schedule of the
Applicable Base Rate Margin and Applicable Eurodollar Rate Margin for the first
Fiscal Quarter of the next Fiscal Year;
(c) promptly after the same are received by the Borrower, a copy of
each management letter provided to the Borrower by its independent certified
public accountants which refer in whole or in part to any inadequacy, defect,
problem, qualification or other lack of fully satisfactory accounting controls
utilized by the Borrower or any of its Subsidiaries; and
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(d) as soon as available and in any event no later than 30 days after
the end of each Fiscal Year, quarterly financial projections for the Borrower,
on a consolidated basis, for the ensuing Fiscal Year.
6.12. REPORTING REQUIREMENTS. The Borrower shall furnish to the Lenders:
(a) (i) promptly and in any event within 30 days after the Borrower,
any of its Subsidiaries or any ERISA Affiliate knows or has reason to know that
any ERISA Event has occurred and (ii) promptly and in any event within 10
Business Days after the Borrower, any of its Subsidiaries or any ERISA Affiliate
knows or has reason to know that a request for a minimum funding waiver under
Section 412 of the Code has been filed with respect to any Qualified Plan, a
written statement of the chief financial officer or other appropriate officer of
the Borrower describing such ERISA Event or waiver request and the action, if
any, which the Borrower, its Subsidiaries and ERISA Affiliates propose to take
with respect thereto and a copy of any notice filed with the PBGC or the IRS
pertaining thereto;
(b) promptly and in any event within 30 days after the filing thereof
by the Borrower, any of its Subsidiaries or any ERISA Affiliate, a copy of each
annual report (Form 5500 Series, including Schedule B thereto) with respect to
each Pension Plan, and upon request by any Lender through the Administrative
Agent with respect to any other Plan;
(c) promptly and in any event within 30 days after receipt thereof, a
copy of any notice which would have an adverse effect, determination letter,
ruling or opinion the Borrower, any of its Subsidiaries or any ERISA Affiliate
receives from the PBGC, DOL or IRS with respect to any Qualified Plan;
(d) promptly and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Borrower, any of its Subsidiaries or
any ERISA Affiliate receives from the plan sponsor (as defined by Section
4001(a)(10) of ERISA) of any Multiemployer Plan concerning potential withdrawal
liability of the Borrower, any of its Subsidiaries or any ERISA Affiliate, or
notice of any reorganization with respect to any Multiemployer Plan, together
with a written statement of the chief financial officer or other appropriate
officer of the Borrower of the action which the Borrower, its Subsidiaries and
ERISA Affiliates propose to take with respect thereto;
(e) promptly and in any event within 30 days after the adoption
thereof, notice of (i) any amendment to a Title IV Plan which results in an
increase in benefits or the adoption of any new Title IV Plan and (ii) any
amendment to a, or adoption of a new, welfare benefit plan, as defined in
Section 3(1) of ERISA, which the Borrower or any of its Subsidiaries maintains
or contributes or has an obligation to contribute to and which results in an
increase in benefits for retirees or new benefits for retirees;
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(f) promptly and in any event within 10 Business Days after receipt of
written notice of commencement thereof, notice of any action, suit or proceeding
before any Governmental Authority or arbitrator affecting the Borrower, any of
its Subsidiaries or any ERISA Affiliate with respect to any Plan, except those
which, individually or in the aggregate if adversely determined, would have no
reasonable likelihood of having a Material Adverse Effect;
(g) promptly and in any event within 30 days after notice or knowledge
thereof, notice that the Borrower or any of its Subsidiaries becomes subject to
the tax on prohibited transactions imposed by Section 4975 of the Code, together
with a copy of Form 5330;
(h) promptly after the commencement thereof, notice of all actions,
suits and proceedings before any domestic or foreign Governmental Authority or
arbitrator, which could have any reasonable likelihood of having a Material
Adverse Effect;
(i) promptly and in any event within two Business Days after the
Borrower becomes aware of the existence of (i) any Default or Event of Default,
(ii) any breach or nonperformance of, or any default under, any Related Document
or any Contractual Obligation which is material to the business, prospects,
operations or financial condition of the Borrower or any of its Subsidiaries or
(iii) any Material Adverse Effect, any Material Adverse Change or any
development or other information which might have a Material Adverse Effect,
telephonic, telecopy or telegraphic notice specifying the nature of such
Default, Event of Default, development or information, including the anticipated
effect thereof, which notice shall be promptly confirmed in writing within two
days;
(j) promptly after the sending or filing thereof, copies of all
notices, certificates or reports delivered pursuant to any Related Document;
(k) promptly after the sending or filing thereof, copies of all the
proxy statements, financial statements or reports which Parent or the Borrower
sends to its security holders generally, and copies of all reports and
registration statements which the Parent or the Borrower or any of the
Borrower's Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange;
(l) upon the request of any Lender, through the Administrative Agent,
copies of all federal, state and local tax returns and reports filed by the
Borrower or any of its Subsidiaries in respect of taxes measured by income
(excluding sales, use and like taxes); and
(m) such other information respecting the business, properties or
condition or operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender through the Administrative Agent may from time to
time reasonably request.
6.13. BROKER'S FEE. The Borrower shall indemnify the Administrative
Agent, the Documentation Agent and the Lenders for, and hold the Administrative
Agent, the Documentation
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Agent and the Lenders harmless from and against, any and all claims for
brokerage commissions, fees and other compensation made against the
Administrative Agent, the Documentation Agent or any of the Lenders for any
broker, finder or consultant with respect to any agreement, arrangement or
understanding made by or on behalf of any Loan Party or its Subsidiaries in
connection with the transactions contemplated by this Agreement.
6.14. EMPLOYEE PLANS. (a) With respect to other than a Multiemployer
Plan, for each Qualified Plan hereafter adopted or maintained by the Borrower,
any of its Subsidiaries or any ERISA Affiliate, the Borrower shall (i) seek, and
cause such of its Subsidiaries and ERISA Affiliates to seek, and receive
determination letters from the IRS to the effect that such Qualified Plan is
qualified within the meaning of Section 401(a) of the Code; and (ii) from and
after the adoption of any such Qualified Plan, cause such plan to be qualified
within the meaning of Section 401(a) of the Code and to be administered in all
material respects in accordance with the requirements of ERISA and Section
401(a) of the Code.
(b) With respect to each Welfare Benefit Plan hereafter adopted or
maintained by the Borrower, any of its Subsidiaries or any ERISA Affiliate, the
Borrower shall comply, and cause such of its Subsidiaries and ERISA Affiliates
to comply, with the notice and continuation coverage requirements of Section
4980B of the Code and the regulations thereunder provided that such failure to
comply shall not result in a loss of deduction or imposition of a tax or penalty
in excess of $100,000.
(c) With respect to each HMC Affiliate Plan, the Borrower shall
promptly furnish to the Banks and in any event within ten Business Days after
any HMC ERISA Affiliate:
(i) failed to make a required contribution to any HMC Affiliate
Plan which would result in the imposition of a lien under Section 412 of
the Code or Section 302 of ERISA, a statement of the chief financial
officer of the Borrower describing the action, if any, which such HMC ERISA
Affiliate proposes to take with respect thereto, together with a copy of
the notice to the PBGC of such failure;
(ii) knows or has reason to know that a Reportable Event has
occurred and as a result thereof there are reasonable grounds for the
termination of a HMC Affiliate Plan by the PBGC, a statement of the chief
financial officer of the Borrower describing such Reportable Event and the
action, if any, which the HMC ERISA Affiliate proposes to take with respect
thereto;
(iii) has or intends to terminate any HMC Affiliate Plan under a
distress termination within the meaning of Section 4041(c) of ERISA, a copy
of such notice;
(iv) has received a notice of liability and demand for payment
from a HMC Affiliate Plan, which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA, and such liability is not satisfied when due
and payable, a copy of such notice; and
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(v) has failed to comply with the notice and benefit
continuation requirements of COBRA where such failure will result in a loss
of deduction or imposition of a tax or penalty, a copy of a statement of
such noncompliance.
6.15. ENVIRONMENTAL MATTERS. The Borrower shall, and shall cause each of
its Subsidiaries to, (a) comply with all the Environmental Laws except where
noncompliance would not have a reasonable likelihood of resulting in liabilities
of $500,000 or more in the aggregate; (b) notify the Administrative Agent
promptly in the event of any Spill upon any premises owned or occupied by any
such Person where such Spill could reasonably be expected to subject such Person
to liability of $500,000 or more in the aggregate; (c) keep all of the real
property it owns or leases free of contamination from any substance or material
identified as being toxic or hazardous pursuant to any Environmental Laws,
including any asbestos, PCB, radioactive substance, methane, volatile
hydrocarbons, industrial solvents or any other material or substance which was
in the past or which is reasonably likely in the future to cause or constitute a
health, safety or environmental hazard to any Person or property except where
failure to do so would not have a reasonable likelihood of resulting in
liabilities of $500,000 or more in the aggregate; and (d) promptly forward to
the Administrative Agent a copy of any order, notice, permit, application or any
other communication or report in connection with any such Spill or hazardous
substance or any other matter relating to the Environmental Laws as they may
affect such premises where the potential liability resulting from such Spill,
hazardous substance or other matter could reasonably be expected to be $100,000
or more in the aggregate.
6.16. MAINTENANCE OF LICENSES AND PERMITS. The Borrower shall maintain,
and cause each of its Subsidiaries to maintain, all material rights, permits,
licenses (including, without limitation, any and all material licenses issued
by, at the direction of or in connection with any order issued by the Federal
Communications Commission), approvals and privileges necessary for the proper
conduct of its and each of such Subsidiaries', business and to continue to
engage in the same type of business or related businesses.
6.17. AUDITOR'S LETTER. The Borrower shall deliver to the Administrative
Agent, from time to time upon any change in the Borrower's regular independent
public accountants, a letter from such new independent public accountant
identical in substance to the Auditor's letter delivered to the Administrative
Agent pursuant to Section 3.1.
6.18. FISCAL YEAR. The Borrower shall maintain as its Fiscal Year the
twelve month period ending on December 31 of each year.
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ARTICLE VII
NEGATIVE COVENANTS
As long as any of the Obligations or Commitment remain outstanding, without
the written consent of the Majority Lenders:
7.1. LIENS, ETC. The Borrower shall not create or suffer to exist, and
shall not permit any of its Subsidiaries to create or suffer to exist, any Lien
upon or with respect to any of its or such Subsidiary's properties, whether now
owned or hereafter acquired or become a party to, or permit any of its
Subsidiaries to become a party to, any Contractual Obligation the performance of
which, either conditionally or upon the happening of an event, will result in
the creation of such Lien, except:
(a) Liens created pursuant to the Loan Documents or the Related
Documents;
(b) Purchase money Liens or purchase money security interests
upon or in any property acquired or held by the Borrower or any of its
Subsidiaries in the ordinary course of business to secure the purchase
price of such property or to secure Indebtedness incurred solely for the
purpose of financing the acquisition of such property, and Liens existing
on such property at the time of its acquisition (other than any such Lien
created in contemplation of such acquisition); provided, however, that the
aggregate principal amount of the Indebtedness secured by the Liens
referred to in this clause (b) shall not exceed $2,000,000 at any time
outstanding;
(c) Any Lien securing the renewal, extension or refunding of any
Indebtedness or other obligation secured by any Lien permitted by
subsections (b), (i) or (j) of this Section 7.1 without any increase in the
amount secured thereby or in the assets subject to such Liens;
(d) Liens arising by operation of law in favor of materialmen,
mechanics, warehousemen, carriers, lessors or other similar Persons
incurred by the Borrower to any of its Subsidiaries in the ordinary course
of business which secure its obligations to such Person; PROVIDED, HOWEVER,
that (i) the Borrower or such Subsidiary is not in default with respect to
such payment obligation to such Person or is in good faith and by
appropriate proceedings diligently contesting such obligation and (ii) the
failure to pay such obligation would not have a Material Adverse Effect;
(e) Liens securing taxes, assessments or governmental charges or
levies; PROVIDED, HOWEVER, that (i) neither the Borrower nor any of its
Subsidiaries is in default in respect of any payment obligation with
respect thereto unless the Borrower or such Subsidiary is in good faith and
by appropriate proceedings diligently contesting such obligation and
adequate reserves therefor have been established on the books of the
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Borrower or such Subsidiary in accordance with GAAP and (ii) the failure to
pay such obligation would not have a Material Adverse Effect;
(f) Liens incurred or pledges and deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, old-age pensions and other social security benefits;
(g) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety and appeal bonds and other obligations of like nature,
incurred as an incident to and in the ordinary course of business;
PROVIDED, HOWEVER, that all such Liens would not in the aggregate have a
Material Adverse Effect;
(h) Zoning restrictions, easements, licenses, reservations,
restrictions on the use of real property or minor irregularities incident
thereto which do not in the aggregate materially detract from the value or
use of the property or assets of the Borrower or any of its Subsidiaries or
impair the use of such property for the purposes for which such property is
held by the Borrower or any such Subsidiary;
(i) Liens in favor of landlords securing leases permitted by
Section 7.3;
(j) Liens existing on the date of this Agreement and disclosed
on Schedule 7.1; or
(k) Liens on assets of Excluded Subsidiaries securing
Indebtedness permitted by Section 7.2(k).
7.2. INDEBTEDNESS. The Borrower shall not create or suffer to exist, or
permit any of its Subsidiaries to create or suffer to exist, any Indebtedness
except:
(a) the Obligations;
(b) current liabilities in respect of taxes, assessments and
governmental charges or levies incurred, or claims for labor, materials,
inventory, services, supplies and rentals incurred, or for goods or
services purchased, in the ordinary course of business consistent with the
past practice of the Borrower and its Subsidiaries, and other liabilities
for taxes, charges and other impositions where the failure to make timely
payment will not, individually or in the aggregate, have a Material Adverse
Effect;
(c) Indebtedness owing to the Borrower or any wholly owned
Subsidiary of the Borrower by the Borrower or any wholly owned Subsidiary
of the Borrower (other than an Excluded Subsidiary), which Indebtedness
(other than Indebtedness owing to a Foreign
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Subsidiary (as defined in the Pledge Agreement)) is evidenced by a note
which is pledged to the Collateral Agent under the Pledge Agreement;
(d) Indebtedness of the Borrower to the Parent which is
subordinated to the Obligations pursuant to a subordination agreement
reasonably satisfactory in form and substance to the Majority Lenders and
which Indebtedness is evidenced by a note which is pledged to the
Collateral Agent under the Pledge Agreement; PROVIDED, HOWEVER, that
(i) any rate of interest applicable to such Indebtedness is not greater
than the rate applicable from time to time hereunder and (ii) at the time
of any repayment of, or payment of interest on, such Indebtedness, after
giving effect thereto, no Default or Event of Default shall occur and be
continuing;
(e) Indebtedness of the Borrower which is expressly subordinated
to the Obligations and the terms and conditions of which are reasonably
satisfactory to the Majority Lenders;
(f) Indebtedness arising under any appeal bond or performance
bond reimbursement obligation entered into consistent with the past
practice of the Borrower;
(g) Indebtedness secured by Liens permitted by Section 7.1(b)
and any renewal, extension or refunding thereof permitted by
Section 7.1(c);
(h) Indebtedness in respect of Contingent Obligations to the
extent such Contingent Obligations are permitted under Section 7.13;
(i) Indebtedness set forth on Schedule 4.23;
(j) Capitalized Lease Obligations to the extent permitted under
Section 7.3;
(k) (i) Indebtedness of Excluded Subsidiaries set forth on
Schedule 4.23 plus (ii) Indebtedness of Excluded Subsidiaries not to
exceed, together with Contingent Obligations permitted under
Section 7.13(f)(ii), $10,000,000 in aggregate amount at any time
outstanding; and
(l) Other Indebtedness in an aggregate amount not to exceed
$10,000,000 at any time outstanding.
7.3. LEASE OBLIGATIONS. (a) The Borrower shall not create or suffer to
exist, or permit any of its Subsidiaries to create or suffer to exist, any
obligations as lessee (i) for the rental or hire of real or personal property in
connection with any sale and leaseback transaction or (ii) for the rental or
hire of real property of any kind under other leases or agreements to lease
having an original term of one year or more, except for (A) leases existing on
the Closing Date and disclosed on Schedule 4.22(b) (including any renewal,
extension or amendment thereof) and (B) leases
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entered into by the Borrower or its Subsidiaries in the ordinary course of
business in a manner and to an extent consistent with past practice; PROVIDED,
HOWEVER, that the base rent per annum for all leases of the Borrower and its
Subsidiaries shall not exceed $9,000,000 for any Fiscal Year; PROVIDED, FURTHER,
that none of the provisions of this Section 7.3(a) shall apply to the
programming agreements of the Borrower or any of its Subsidiaries.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, become or remain liable as lessee or guarantor or other surety
with respect to any lease, whether an operating lease or a Capitalized Lease, of
any property (whether real or personal or mixed), whether now owned or hereafter
acquired, which (i) the Borrower or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person or (ii) the Borrower
or any of its Subsidiaries intends to use for substantially the same purposes as
any other property which has been or is to be sold or transferred by that entity
to any other Person in connection with such lease; PROVIDED, HOWEVER, that the
Borrower and its Subsidiaries may become so liable with respect to such leases
to the extent that the obligations thereunder do not exceed $100,000 at any one
time.
7.4. RESTRICTED PAYMENTS. The Borrower shall not declare or make, and
shall not permit any of its Subsidiaries to declare or make, any Stock Payment
except (a) dividends or distributions paid to the Borrower or any wholly owned
Subsidiary of the Borrower by any wholly owned Subsidiary of the Borrower,
(b) payments by the Borrower or any of its Subsidiaries pursuant to a
tax-sharing agreement satisfactory to the Administrative Agent which requires
payments by the Borrower or its Subsidiaries to the extent the Parent incurs
consolidated tax liability, (c) payments pursuant to Indebtedness permitted
under Section 7.2(c) and (e) and (d) dividends by the Borrower to the Parent in
an amount not to exceed the sum of (i) the aggregate amount of all cash
contributions by the Parent to the Borrower from and after the Closing Date,
(ii) amounts required by the Parent to make required payments under the Senior
Subordinated Notes and the Acquisition Indebtedness, PROVIDED, that such amounts
are reflected on the schedule described in Section 6.11(a)(iii) or (b)(iii)
accompanying the next set of financial statements delivered by the Borrower
pursuant thereto, and (iii) $7,500,000, or, from and after such time as the
Total Debt to EBITD Ratio is less than 4.50 to 1.0, $45,000,000, or, from and
after such time as the Total Debt to EBITD Ratio is less than 4.0 to 1.0,
$55,000,000, or, from and after such time as the Total Debt to EBITD Ratio is
less than 3.50 to 1.0, $65,000,000; PROVIDED, HOWEVER, that no dividend
described in this clause (d) shall be declared or paid if, at the time of such
declaration or payment, or after giving effect to such declaration or payment, a
Default or Event of Default shall have occurred and be continuing.
7.5. MERGERS, SALE OF ASSETS, ETC. (a) Except as otherwise specifically
provided herein, the Borrower shall not, and shall not permit any of its
Subsidiaries to, (i) merge with any Person (except for (A) mergers by
Subsidiaries of the Borrower with the Borrower or other Subsidiaries (other than
Excluded Subsidiaries) of the Borrower and (B) mergers by Excluded Subsidiaries
with other Excluded Subsidiaries), (ii) consolidate with any Person,
(iii) except in connection with Permitted Investments, enter into any joint
venture or partnership with any Person or (iv) sell,
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lease, transfer or otherwise dispose of, whether in one transaction or in a
series of transactions, all or substantially all of its assets.
(b) The Borrower shall not (i) issue or transfer, or permit any of its
Subsidiaries to issue or transfer, any Stock, other than any such issuance or
transfer (A) by the Borrower to Parent, (B) by an indirect wholly owned
Subsidiary of the Borrower to another wholly owned Subsidiary of the Borrower or
(C) by a wholly owned Subsidiary of the Borrower to the Borrower or (ii) sell,
convey, transfer, lease or otherwise dispose of, or permit any of its
Subsidiaries to sell, convey, transfer, lease or otherwise dispose of, any Stock
of any of the Borrower's Subsidiaries unless, in any such case, (A) all of the
Stock of such Subsidiary owned by the Borrower and its Subsidiaries is
transferred and (B) such issuance, sale, conveyance, transfer, lease or
disposition would be permitted by subsection (c) of this Section 7.5.
(c) Except as set forth on Schedule 7.5(c), the Borrower shall not
sell, convey, transfer, lease or otherwise dispose of any of its assets or any
interest therein to any Person or permit any of its Subsidiaries to sell,
convey, transfer, lease or dispose of any of its assets or any interest therein
to any Person, or permit or suffer any other Person to acquire any interest in
any of the assets of the Borrower or any such Subsidiary, except (i) the sale or
disposition of inventory in the ordinary course of business or of assets which
have become obsolete or unnecessary in light of current business requirements,
or used equipment or leased motor vehicles, (ii) leases of personal property by
the Borrower or any wholly owned Subsidiary of the Borrower to the Borrower or
to any wholly owned Subsidiary of the Borrower, (iii) exchanges of assets for
assets with a Fair Market Value at least equal to the Fair Market Value of the
assets being exchanged, (iv) transfers of assets by wholly owned Subsidiaries of
the Borrower to other wholly-owned Subsidiaries (other than Excluded
Subsidiaries) of the Borrower, and (v) transfers of assets by Excluded
Subsidiaries to other Excluded Subsidiaries.
(d) Upon any sale or other disposition by the Borrower or any of its
Subsidiaries of any assets that are pledged to the Collateral Agent under the
Pledge Agreement, which sale or disposition is permitted under the terms of this
Agreement, such assets shall no longer be Collateral under the Pledge Agreement.
7.6. INVESTMENTS IN OTHER PERSONS. The Borrower shall not, directly or
indirectly, make, or permit any of its Subsidiaries to make, any loan or advance
to any Person (other than loans to employees in the ordinary course of business)
or purchase or otherwise acquire, or permit any of its Subsidiaries to purchase
or otherwise acquire, any Stock, other equity interest, obligations or other
securities of, or make, or permit any of its Subsidiaries to make, any capital
contribution to, or otherwise invest in, any Person (any such transaction being
an "Investment"), except:
(a) Investments (including Acquisitions) expressly permitted or
required hereunder;
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(b) Investments in Subsidiaries of the Borrower which have
executed a Subsidiary Guaranty and all of the outstanding Stock of which is
pledged to the Collateral Agent pursuant to the Pledge Agreement; PROVIDED,
HOWEVER, the aggregate amount of Investments in Excluded Subsidiaries shall
not exceed $5,000,000 at any time;
(c) Investments set forth on Schedule 7.6;
(d) Investments in (i) Stock of any Person which, when combined
with other Investments by the Borrower and its Subsidiaries in such Person,
consist of less than the majority of the Stock of such Person,
(ii) Indebtedness of any Person not an Affiliate of the Borrower and (iii)
assets of any Person where such assets are to be used in the in-store
marketing, direct marketing, point-of-purchase or broadcast business, or
related businesses, including, without limitation, assets related to new
products to be sold or marketed by Actmedia; PROVIDED, HOWEVER, that the
Investments described in this paragraph (d) shall be subject to the
following limitations: (A) the aggregate amount of such Investments shall
not exceed $5,000,000 at any time; (B) no such Investment shall be
permitted if, prior to or after giving effect to such Investment, a Default
or Event of Default shall occur and be continuing; and (C) any such
Investment which consists of general partnership interests shall only be
made through a Subsidiary of the Borrower which owns no assets other than
such general partnership interests;
(e) Investments in Cash Equivalents; and
(f) Investments consisting of the purchase by the Borrower of
Senior Subordinated Notes; PROVIDED, HOWEVER, that in no event shall the
aggregate amount of such Investments exceed at any time, together with the
aggregate Acquisition Consideration paid under Section 7.17 hereof during
the term hereof, the dollar limitation in effect at such time under
Section 7.17 hereof, and that the Borrower shall not purchase any Senior
Subordinated Notes for amounts in excess of 110% of the face value thereof.
7.7. MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES. Except as expressly
permitted in Section 7.5, the Borrower shall not sell or otherwise dispose of
any shares of Stock of any Subsidiary (other than stock of Excluded
Subsidiaries) or permit any Subsidiary (other than Excluded Subsidiaries) to
issue, sell or otherwise dispose of any shares of its Stock or the Stock of any
other Subsidiary (other than stock of Excluded Subsidiaries), except to the
Borrower and then only if pledged to the Collateral Agent pursuant to the Pledge
Agreement.
7.8. CHANGE IN NATURE OF BUSINESS. The Borrower shall not, directly or
indirectly, make, or permit any of its Subsidiaries to make, any material change
in the nature of its business as carried on at the date hereof other than as
expressly permitted herein.
7.9. COMPLIANCE WITH ERISA. The Borrower shall not, directly or
indirectly, and shall not permit its Subsidiaries or any ERISA Affiliate to
directly or indirectly, by reason of an
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amendment or amendments to, or the adoption of, one or more Title IV Plans,
permit the present value of all benefit liabilities, as defined in Title IV of
ERISA (using the actuarial assumptions utilized by the PBGC upon termination of
a plan), to materially (in the opinion of the Majority Lenders) exceed the fair
market value of assets allocable to such benefits, all determined as of the most
recent valuation date for each such Title IV Plan. Neither the Borrower nor any
of its Subsidiaries shall establish or become obligated to any new, or modify
any existing, Welfare Benefit Plan either not funded totally by insurance or
which provides retiree benefits so as to increase its obligations thereunder,
except in the ordinary course of business consistent with past practice or in
connection with the retention of employees of a Person acquired by the Borrower
or any of its Subsidiaries, which could result in any material (in the opinion
of the Majority Lenders) liability, net of applicable insurance or assets, to
the Borrower or any ERISA Affiliate. Neither the Borrower nor any of its
Subsidiaries shall establish or become obligated to any new unfunded Pension
Plan, or modify any existing unfunded Pension Plan, which would result in an
increase in the present value of future liabilities under all such plans of more
than $1,000,000.
7.10. MODIFICATION OF RELATED DOCUMENTS. The Borrower shall not, and
shall not permit any of its Subsidiaries to, (a) amend, supplement or otherwise
modify any provision of any Related Document or any Pledged Note, or take or
fail to take any action thereunder, which would directly or indirectly have a
Material Adverse Effect; or (b) amend, modify or change, or consent or agree to
any amendment, modification or change to, any of the terms of the Senior Notes
or the Indenture relating to the payment or prepayment of principal of, or
premium or interest on, any Senior Note or where such amendment, modification,
change or consent would have a reasonable likelihood of having a Material
Adverse Effect.
7.11. MODIFICATION OF MATERIAL AGREEMENTS. Except as otherwise permitted
in Section 7.10, the Borrower shall not, and shall not permit any of its
Subsidiaries to, alter, amend, modify, rescind, terminate or waive any of their
respective rights under, or permit any breach or event of default to exist
under, any material Contractual Obligations of the Borrower or any of its
Subsidiaries; PROVIDED, HOWEVER, that, with respect to any Contractual
Obligations other than the Loan Documents, the Senior Notes and the Indenture,
the Borrower and its Subsidiaries may do so if the consequences thereof have no
reasonable likelihood of having a Material Adverse Effect; and PROVIDED,
FURTHER, that in the event of any breach or event of default by a Person other
than the Borrower or any of its Subsidiaries, the Borrower shall, if such breach
or event could have a reasonable likelihood of having a Material Adverse Effect,
promptly notify the Administrative Agent of any such breach or event of default
and take all such action as may be reasonably necessary in order to endeavor to
cause such breach or event of default to be cured.
7.12. ACCOUNTING CHANGES. The Borrower shall not make, and shall not
permit any of its Subsidiaries to make, any significant change in accounting
treatment and reporting practices except as permitted in conformity with GAAP or
law and disclosed to the Lenders and the Administrative Agent.
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7.13. CONTINGENT OBLIGATIONS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, incur, assume, endorse, be or become liable
for, or guarantee, directly or indirectly, or permit or suffer to exist, any
Contingent Obligation, except for:
(a) Contingent Obligations expressly permitted hereunder;
(b) endorsements for collection or deposit in the ordinary
course of business;
(c) guarantees by the Borrower of Indebtedness of any of its
Subsidiaries, to the extent such underlying Indebtedness is permitted
hereunder;
(d) guarantees by Subsidiaries of the Borrower of Indebtedness
of the Borrower or other Subsidiaries of the Borrower, to the extent such
underlying Indebtedness is permitted hereunder;
(e) Contingent Obligations listed on Schedule 7.13;
(f) (i) Contingent Obligations of Excluded Subsidiaries set
forth on Schedule 7.13 plus (ii) Contingent Obligations of Excluded
Subsidiaries not to exceed, together with additional Indebtedness permitted
under Section 7.2(k)(ii), $10,000,000 in aggregate amount at any time
outstanding.
7.14. TRANSACTIONS WITH AFFILIATES. The Borrower shall not do, and shall
not permit any of its Subsidiaries to do, except as otherwise expressly
permitted herein, any of the following: (a) make any Investment in any of its
Affiliates which is not a wholly owned Subsidiary of the Borrower; (b) transfer,
sell, lease, assign or otherwise dispose of any assets to any such Affiliate;
(c) merge into or consolidate with or purchase or acquire assets from any
Affiliates, other than a wholly owned Subsidiary of the Borrower; or (d) except
as set forth on Schedule 7.14, enter into any other transaction directly or
indirectly with or for the benefit of any such Affiliate (including, without
limitation, guaranties and assumptions of obligations of any such Affiliate),
except for transactions in the ordinary course of business on a basis no less
favorable to the Borrower or such Subsidiary as would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate.
7.15. ADVERSE TRANSACTIONS. The Borrower shall not enter into or be a
party to, or permit any of its Subsidiaries to enter into or be a party to, any
transaction the performance of which in the future would be inconsistent with or
could require the breach of any covenant contained herein or give rise to a
Default or Event of Default.
7.16. CANCELLATION OF INDEBTEDNESS OWED TO IT. Except as otherwise
permitted by the Pledge Agreement, the Borrower shall not, and shall not permit
any of its Subsidiaries to, cancel any material claim or Indebtedness owed to it
or any such Subsidiary, except (a) for adequate consideration and in the
ordinary course of business, (b) trade receivables in the ordinary course
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of business or (c) intercompany Indebtedness not pledged to the Collateral Agent
for the ratable benefit of the Secured Parties.
7.17. ACQUISITIONS. Except as otherwise specifically permitted
hereunder, the Borrower shall not, and shall not permit any of its Subsidiaries
to, make in one or more transactions, any Acquisition, PROVIDED, HOWEVER, that
Acquisitions shall be allowed subject to the following limitations: (A) the
aggregate Acquisition Consideration for all Acquisitions after the Closing Date,
together with Investments permitted under Section 7.6(f) hereof, shall not
exceed the sum of the amount of any proceeds received from the sale or other
disposition of any Permitted Investment plus, from and after such time as the
Total Debt to EBITD Ratio is less than 4.5 to 1.0, $50,000,000, or, from and
after such time as the Total Debt to EBITD Ratio is less than 4.0 to 1.0,
$75,000,000, or, from and after such time as the Total Debt to EBITD Ratio is
less than 3.5 to 1.0, $100,000,000; (B) the Borrower shall, promptly upon
committing to make any Acquisition for which the Acquisition Consideration
therefor exceeds $5,000,000, at least five Business Days prior to making such
Acquisition, give the Administrative Agent notice of such Acquisition, including
all relevant details regarding such Acquisition; (C) no such Acquisition shall
be permitted if, prior to or after giving effect to such Acquisition, a Default
or Event of Default shall occur and be continuing; (D) any such Acquisition
which consists of general partnership interests shall only be made through a
Subsidiary of the Borrower which owns no assets other than such general
partnership interests; and (E) unless such Subsidiary is an Excluded Subsidiary,
all of the outstanding Stock of such Subsidiary is directly or indirectly owned
by the Borrower and pledged to the Collateral Agent pursuant to the Pledge
Agreement and such Subsidiary executes a Subsidiary Guaranty.
7.18. CAPITAL STRUCTURE. The Borrower shall not make, and shall not
permit any of its Subsidiaries to make, any change in its capital structure
(including, without limitation, in the terms of its outstanding Stock) except as
expressly permitted herein, amend its certificate of incorporation or by-laws
(except where such amendment could not reasonably be expected to materially
adversely affect repayment of the Obligations and the Administrative Agent
receives 10 days' prior written notice of such amendment), or make, or permit
any of its Subsidiaries to make, any change in any of its business objectives,
purposes or operations which might in any way materially and adversely affect
the repayment of the Obligations.
7.19. NO SPECULATIVE TRANSACTIONS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, engage in any transactions involving
commodity options or futures contracts, except for the sole purpose of hedging
in the normal course of business and consistent with industry practices, or
engage in any speculative transaction, except as required by Section 6.15.
7.20. INTERNAL REVENUE CODE SECTION 338. The Borrower shall not make any
election under Section 338 of the Code other than a protective carryover
election pursuant to the Treasury Regulations issued under such Section.
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7.21. MARGIN REGULATIONS. The Borrower shall not use the proceeds of any
Loans to purchase or carry any Margin Stock in violation of Regulations G, T, U
or X of the Board of Governors of the Federal Reserve System.
ARTICLE VIII
EVENTS OF DEFAULT
8.1. EVENTS OF DEFAULT. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) The Borrower shall fail to pay (i) any principal (including
mandatory prepayments of principal) of any Loan when the same becomes due
and payable or (ii) any interest on any Loan or any fee, any other amount
due hereunder or under the other Loan Documents or any other Obligations
one Business Day after the same becomes due and payable; or
(b) Any representation or warranty made or deemed made by any
Loan Party in any Loan Document or by any Loan Party (or any of its
officers) in connection with any Loan Document shall prove to have been
incorrect in any material respect when made or deemed made; or
(c) Any Loan Party shall fail to perform or observe (i) any
term, covenant or agreement contained in Articles V, VI (other than
Section 6.4, 6.7, 6.8 or 6.9) or VII, or (ii) any other term, covenant or
agreement contained in this Agreement or in any other Loan Document if such
failure under this clause (ii) shall remain unremedied for five days after
the earlier of the date on which (A) a Responsible Officer of the Borrower
becomes aware of such failure or (B) written notice thereof shall have been
given to the Borrower by the Administrative Agent, the Documentation Agent
or any Lender; or
(d) (i) Any Loan Party or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Senior Subordinated
Note, any Senior Note or any other Indebtedness in an aggregate amount of
$1,500,000 or more of such Loan Party or Subsidiary (excluding the
Obligations), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise); or
(ii) any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Indebtedness in an aggregate
amount of $1,500,000 or more, if the effect of such event or condition is
to accelerate, or to permit the acceleration of, the maturity of such
Indebtedness and, if the Indebtedness is Indebtedness of the Parent, the
Parent shall have received notice that such event has occurred or condition
exists; or any such Indebtedness shall be declared to be due and payable,
or required to be prepaid (other
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than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; or
(e) Any Loan Party or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors, or any proceeding shall be instituted by or
against any Loan Party or any of its Subsidiaries seeking to adjudicate it
a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official
for it or for any substantial part of its property; or any Loan Party or
any of its Subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess of
$2,000,000 shall be rendered against any Loan Party or any of its
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall
be any period of 60 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(g) (i) With respect to any Plan, a prohibited transaction
within the meaning of Section 4975 of the Code or Section 406 of ERISA
shall occur which in the aggregate would reasonably result in direct or
indirect liability to the Borrower or any of its Subsidiaries in excess of
$1,000,000 under Section 409 or 502 of ERISA or Section 4975 of the Code,
(ii) with respect to any Title IV Plan, the filing of a notice to
voluntarily terminate any such plan in a distress termination, (iii) with
respect to any Multiemployer Plan, the Borrower, any of its Subsidiaries or
any ERISA Affiliate shall incur any Withdrawal Liability in the aggregate
in excess of $1,000,000, (iv) with respect to any Qualified Plan, the
Borrower, any of its Subsidiaries or any ERISA Affiliate shall incur an
accumulated funding deficiency in the aggregate in excess of $900,000 or
request a funding waiver from the IRS in the aggregate in excess of
$900,000, or (v) with respect to any Title IV Plan or Multiemployer Plan
which has an ERISA Event not described in clauses (i) through (iv) hereof,
in the reasonable determination of the Administrative Agent there is a
reasonable likelihood for termination of any such plan by the PBGC;
PROVIDED, HOWEVER, that the events described in clause (v) hereof shall
constitute Events of Default only if the maximum amount of liability the
Borrower, any of its Subsidiaries or any ERISA Affiliate could incur in the
aggregate exceeds $1,000,000; or
(h) For the period during which the Parent and any of its
Subsidiaries, other than the Borrower or any of its Subsidiaries, are
treated as a single employer with the Borrower under Section 414(b), (c),
(m) or (o) of the Code or, at any time after such
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period when the occurrence of any of the following events could subject the
Borrower to joint and several liability with the Parent and any of its
Subsidiaries with respect to any HMC Affiliate Plan: (i) the failure to
make a required contribution by the due date under Section 302 of ERISA
which would result in the imposition of a lien under Section 412 of the
Code or Section 302 of ERISA; (ii) the incurring of any withdrawal
liability in the aggregate in excess of $1,000,000 as a result of a
complete or partial withdrawal within the meaning of Section 4203 or 4205
of ERISA if such withdrawal liability is not satisfied when due and
payable; (iii) notification to the PBGC of an intent to terminate in a
distress termination, or the PBGC shall institute proceedings to terminate,
a HMC Affiliate Plan; or (iv) a Reportable Event shall occur and as a
result thereof there are reasonable grounds for the termination of a HMC
Affiliate Plan by the PBGC; PROVIDED, HOWEVER, that the events listed in
subsections (i) through (iv) shall constitute Events of Default only if the
same could (in the opinion of the Majority Lenders) have a Material Adverse
Effect, materially impair the ability of the Borrower to perform the
Obligations or materially and adversely affect the rights of the
Administrative Agent, the Documentation Agent or the Lenders under the Loan
Documents; PROVIDED FURTHER, HOWEVER, that no such event shall constitute
an Event of Default if the Parent or one or more of its Subsidiaries (A) in
good faith and by appropriate proceedings is diligently contesting the same
and (B) provides additional security adequate (in the opinion of the
Majority Lenders) to secure any loss therefrom; or
(i) Any material provision of any Collateral Document or any
Guaranty after delivery thereof to the Administrative Agent shall for any
reason cease to be valid and binding on any Loan Party thereto, or any such
Loan Party shall so state in writing; or
(j) Except as otherwise permitted hereby or by the terms of any
Collateral Document, any Collateral Document after delivery thereof
pursuant to Section 3.1 shall, for any reason, cease to create a valid Lien
on any of the Collateral purported to be covered thereby, or such Lien
shall cease to be a perfected and first priority Lien; or
(k) There shall occur any default or event which, but for the
requirement that notice be given or time elapse or both, would be a default
under the Indenture; or
(l) The Parent shall fail to own of record and beneficially all
of the outstanding Stock of the Borrower free and clear of all Liens except
the Lien granted under the Pledge Agreement, or there shall occur any
Change of Control; or
(m) There shall occur after December 31, 1995, any material
adverse change in the condition (financial or otherwise), performance,
property or prospects of the Parent, the Borrower and the Borrower's
Subsidiaries taken as a single enterprise;
then, and in any such event, the Documentation Agent (i) shall at the request,
or may with the consent, of the Majority Lenders, declare the obligation of each
Lender to make Loans to be
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terminated, whereupon the same shall forthwith terminate and (ii) shall at the
request, or may with the consent, of the Majority Lenders, by notice to the
Borrower, declare the Notes, the Loans, all interest thereon and all other
amounts and Obligations payable under this Agreement to be forthwith due and
payable, whereupon the Notes, the Loans, all such interest and all such amounts
and Obligations shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; PROVIDED, HOWEVER, that upon the
occurrence of the Event of Default specified in subparagraph (e) above, (A) the
obligation of each Lender to make Loans shall automatically be terminated and
(B) the Notes, the Loans, all such interest and all such amounts and Obligations
shall automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower. In addition to the remedies set forth above, the Documentation
Agent and the Administrative Agent may exercise any remedies provided for by the
Collateral Documents in accordance with the terms thereof, including, without
limitation, the delivery of a Notice of Acceleration under the Pledge Agreement,
or any other remedies provided by applicable law.
ARTICLE IX
THE ADMINISTRATIVE AGENT; THE DOCUMENTATION AGENT;
THE COLLATERAL AGENT
9.1. AUTHORIZATION AND ACTION. (a) Each Lender hereby appoints and
authorizes the Administrative Agent, the Documentation Agent and the Collateral
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the
Administrative Agent, the Documentation Agent or the Collateral Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto. Without limitation of the foregoing, each Lender hereby authorizes the
Administrative Agent, the Documentation Agent and the Collateral Agent to
execute and deliver, and to perform its obligations under, each of the Loan
Documents to which each such Person is a party, and to exercise all rights,
powers and remedies that each such Person may have under such Loan Documents.
(b) As to any matters not expressly provided for by this Agreement and
the other Loan Documents (including, without limitation, enforcement or
collection of the Notes), neither the Administrative Agent, the Documentation
Agent nor the Collateral Agent shall be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders (or as otherwise provided in the Loan
Documents), and such instructions shall be binding upon all holders of Notes;
PROVIDED, HOWEVER, that neither the Administrative Agent, the Documentation
Agent nor the Collateral Agent shall be required to take any action which it in
good faith believes exposes it to personal liability or which is contrary to
this Agreement or any other Loan Document or applicable law. The Administrative
Agent agrees to give to each Lender
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prompt notice of each notice given to it by any Loan Party pursuant to the terms
of this Agreement or the other Loan Documents.
9.2. ADMINISTRATIVE AGENT'S RELIANCE, ETC. None of the Administrative
Agent, the Documentation Agent, the Collateral Agent or any of their respective
Affiliates, directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for its or their own gross
negligence or wilful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent, the Documentation Agent and the Collateral
Agent (a) may treat the payee of any Note as the holder thereof until such Notes
has been assigned in accordance with Section 10.6 signed by such assigning
Lender; (b) may consult with legal counsel (including counsel to the Borrower or
any other Loan Party), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with this Agreement or any of the other Loan Documents;
(d) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or any
of the other Loan Documents on the part of the Borrower or any other Loan Party
or to inspect the property (including the books and records) of the Borrower or
any other Loan Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or any of the other Loan Documents by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telegram, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
9.3. AGENTS AND AFFILIATES. With respect to its Commitment and the
Loans made by it and each Note issued to it, each Agent shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Administrative Agent, the Documentation Agent or
the Collateral Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include each Agent in its individual capacity. Each Agent
and its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrower
or any other Loan Party or any of their respective Subsidiaries and any Person
who may do business with or own securities of the Borrower or any other Loan
Party or any of their respective Subsidiaries, all as if such Agent was not the
Administrative Agent, the Documentation Agent or the Collateral Agent and
without any duty to account therefor to the Lenders.
9.4. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, the
Documentation Agent or any other Lender and based on the financial statements
referred to in Article IV and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
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this Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent, the Documentation Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and other Loan Documents. Each Lender
also acknowledges that its decision to fund the initial Loans shall constitute
evidence to the Agents that such Lender has deemed all of the conditions set
forth in Section 3.2 to have been satisfied.
9.5. INDEMNIFICATION. The Lenders agree to indemnify each Agent and
their respective Affiliates, directors, officers, employees, agents and advisors
(to the extent not reimbursed by the Borrower or other Loan Parties), ratably
according to the respective principal amount of the Notes then held by each of
them (or if no Notes are at the time outstanding, ratably according to the
respective amounts of the aggregate of their Commitment), from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements (including, without
limitation, fees and disbursements of legal counsel) of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against, it in any
way relating to or arising out of this Agreement or the other Loan Documents or
any action taken or omitted by it under this Agreement or the other Loan
Documents; PROVIDED, HOWEVER, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
wilful misconduct of the Administrative Agent, the Documentation Agent or the
Collateral Agent. Without limitation of the foregoing, each Lender agrees to
reimburse the Administrative Agent, the Documentation Agent and the Collateral
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including fees and disbursements of legal counsel) incurred by the
Administrative Agent, the Documentation Agent and the Collateral Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of its rights or
responsibilities under, this Agreement or the other Loan Documents, to the
extent that such Person is not reimbursed for such expenses by the Borrower or
another Loan Party.
9.6. SUCCESSOR AGENTS. Any Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause by the Majority Lenders. Upon any such resignation
or removal, the Majority Lenders shall have the right to appoint a successor
Agent, which shall be a Lender or a commercial bank organized or chartered under
the laws of the United States of America or any State thereof having combined
capital and surplus of at least $250,000,000. If no successor Agent shall have
been so appointed by the Majority Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Majority Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a Lender or a commercial bank organized under the laws of the United
States of America or any State thereof having a combined capital and surplus of
at least $250,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent
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shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents.
ARTICLE X
MISCELLANEOUS
10.1. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Majority Lenders, and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER, that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders do any of the following: (a) waive any of the
conditions specified in Article III except as otherwise provided therein;
(b) increase the Commitment of the Lenders or subject the Lenders to any
additional obligations; (c) reduce the principal of, or interest on, the Loans
or any fees or other amounts payable hereunder; (d) postpone any date fixed for
any payment of principal of, or interest on, the Loans or any fees or other
amounts payable hereunder; (e) change the percentage of the Commitment or the
aggregate unpaid principal amount of the Notes, or the number of Lenders, which
shall be required for the Lenders or any of them to take any action hereunder;
(f) other than releases of Guaranties or Collateral otherwise permitted hereby
or by the other Loan Documents, release or impair any of the Guaranties or any
of the Collateral having a Fair Market Value of $500,000 or more except as shall
otherwise be provided in the Collateral Documents; or (g) amend this
Section 10.1; and provided, further, that no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent and the Documentation
Agent in addition to the Lenders required above to take such action, affect the
rights or duties of the Administrative Agent, the Documentation Agent or the
Collateral Agent under this Agreement or the other Loan Documents.
10.2. NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, telecopy or cable
communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered
by hand, if to the Borrower, at its address at 13355 Noel Road, Dallas,
Texas 75240, Attention: Douglas Woodrum, Executive Vice President; if to any
Lender, at its Domestic Lending Office specified opposite its name on Schedule I
hereto; if to the Documentation Agent, at its address at 901 Main Street, 64th
Floor, Dallas, Texas 75202, Attention: Douglas Stuart, Senior Vice President,
and if to the Administrative Agent, at its address at 399 Park Avenue, New York,
New York 10043, Attention: Heritage Media Account Officer; or, as to the
Borrower, the Administrative Agent or the Documentation Agent, at such other
address as shall be designated by such party in a written
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notice to the other parties and, as to each other party, at such other address
as shall be designated by such party in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, cabled or delivered, be effective when
deposited in the mails, delivered to the telegraph company, confirmed by telex
answerback, telecopied with confirmation of receipt, delivered to the cable
company or delivered by hand to the addressee or its agent, respectively, except
that notices and communications to the Administrative Agent or the Documentation
Agent, as the case may be, pursuant to Article II or IX shall not be effective
until received by the Administrative Agent.
10.3. NO WAIVER; REMEDIES. No failure on the part of any Lender, the
Administrative Agent or the Documentation Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
10.4. COSTS; EXPENSES; INDEMNITIES. (a) The Borrower agrees to pay on
demand (i) all reasonable out-of-pocket costs and expenses of the Administrative
Agent, the Documentation Agent and the Collateral Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement, each of the other Loan Documents and each of the other documents
to be delivered hereunder and thereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel, accountants, appraiser,
consultants or industry experts retained by the Administrative Agent, the
Documentation Agent or the Collateral Agent with respect thereto and of counsel
to the Administrative Agent with respect to advising the Administrative Agent as
to its rights and responsibilities under this Agreement and the other Loan
Documents, and (ii) all costs and expenses of the Administrative Agent, the
Documentation Agent, the Collateral Agent and each Lender (including, without
limitation, reasonable fees and expenses of counsel, accountants, appraisers,
consultants or industry experts retained by the Administrative Agent, the
Documentation Agent, the Collateral Agent or any Lender) in connection with the
restructuring of, enforcement (whether through negotiations, legal proceedings
or otherwise) of or protection of rights under this Agreement, the other Loan
Documents and the other documents to be delivered hereunder or thereunder.
(b) The Borrower agrees, to defend, protect, indemnify and hold
harmless the Administrative Agent, the Documentation Agent, the Collateral Agent
and each Lender and their respective Affiliates (other than, with respect to
Citibank, Citicorp Securities Markets, Inc.), and the directors, officers,
employees, agents, attorneys, consultants and advisors of or to any of the
foregoing (including, without limitation, those retained in connection with the
satisfaction or attempted satisfaction of any of the conditions set forth in
Article III) (each of the foregoing being an "Indemnitee") from and against any
and all claims, damages, liabilities, obligations, losses, penalties, actions,
judgments, suits, costs, disbursements and expenses of any kind or nature
(including, without limitation, reasonable fees and disbursements of counsel to
any such Indemnitee) which may be imposed on, incurred by or asserted against
any such Indemnitee in
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connection with or arising out of any investigation, litigation or proceeding,
whether or not any such Indemnitee is a party thereto, whether direct, indirect
or consequential and whether resulting in whole or in part from the negligence
of any Indemnitee or based on any federal, state or local law or other statutory
regulation, securities or commercial law or regulation, or under common law or
in equity, or on contract, tort or otherwise, in any manner relating to or
arising out of this Agreement, any other Loan Document or any Related Document
or any act, event or transaction related or attendant to any thereof, including,
without limitation, (i) all liabilities and costs arising from the violation of
any Environmental Laws arising from or connected with the past, present or
future operations of the Borrower or any of its Subsidiaries involving any
property subject to a Collateral Document, or damage to real or personal
property or natural resources or harm or injury alleged to have resulted from
any Spill on, upon or into such property or any contiguous real estate, (ii) the
making of any assignments of or participations in the Loans and the management
of such Loans or (iii) the use or intended use of the proceeds of the Loans or
in connection with any investigation of any potential matter covered hereby
(collectively, the "Indemnified Matters"); PROVIDED, HOWEVER, that the Borrower
shall not have any obligation under this Section 10.4(b) to an Indemnitee with
respect to Indemnified Matter caused by or resulting from the gross negligence
or willful misconduct of that Indemnitee, as determined by a court of competent
jurisdiction in a final nonappealable judgment or order.
(c) If any Lender receives any payment of principal of, or is subject
to a conversion of, any Eurodollar Rate Loan other than on the last day of an
Interest Period relating to such Loan, as a result of any payment or conversion
made by the Borrower or acceleration of the maturity of the Notes pursuant to
Section 8.1 or for any other reason, the Borrower shall, upon demand by such
Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender all amounts required to
compensate such Lender for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment or conversion, including, without
limitation, any loss (including loss of anticipated net profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund or maintain such Loan.
10.5. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default, each Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of the Borrower against any and all of the Obligations
irrespective of whether or not such Lender shall have made any demand under this
Agreement or any Note and although such Obligations may be unmatured. Each
Lender agrees promptly to notify the Borrower after any such set-off and
application made by such Lender; PROVIDED, HOWEVER, that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section 10.5 are in addition to the other
rights and remedies (including, without limitation, other rights of set-off)
which such Lender may have.
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10.6. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may, upon notice
to each Agent, sell, transfer, negotiate or assign to one or more other Lenders
or other Persons (other than the Borrower or any of its Subsidiaries or
Affiliates) all or a portion of its Commitment, the Loans owing to it and the
Notes held by it and a commensurate portion of its rights and obligations with
respect thereto hereunder and under the other Loan Documents; PROVIDED, HOWEVER,
that (i) each such sale, transfer, negotiation or assignment shall be of a
constant, and not a varying, percentage of the assigning Lender's rights and
obligations under and in respect of its Commitment, and (ii) the aggregate
amount of the Commitment and Loans being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than the lesser of
(x) such Lender's Total Commitment or (y) $5,000,000 (except as between Lenders,
in which case no minimum shall apply) or an integral multiple of $1,000,000 in
excess thereof. The parties to each assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording, an Assignment and
Acceptance, together with the Notes (or an affidavit of loss and indemnity with
respect to such Notes satisfactory to the Administrative Agent and the Borrower)
subject to such assignment and a processing and recordation fee of $3,000. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in such Assignment and Acceptance, (A) the assignee thereunder
shall become a party hereto and, to the extent that rights and obligations under
the Loan Documents have been assigned to such assignee pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender and
(B) the assignor thereunder shall, to the extent that rights and obligations
under this Agreement have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except to the extent such rights otherwise
survive payment in full of principal and interest hereunder) and be released
from its obligations under the Loan Documents (and, in the case of an Assignment
and Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under the Loan Documents, such Lender shall cease to be a
party hereto). The Administrative Agent shall give the Borrower prompt notice
of any assignment hereunder.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document furnished pursuant thereto or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other Loan Document or any other instrument or document furnished pursuant
hereto or thereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Loan Party or the performance or observance by any Loan Party of any of
its obligations under this Agreement or any other Loan Document or of any other
instrument or document furnished pursuant hereto or thereto; (iii) such assignee
confirms that it has received a copy of this Agreement together with copies of
the financial statements referred to in Section 4.5 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
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independently and without reliance upon the Administrative Agent, such assigning
Lender or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints and
authorizes the Administrative Agent and the Documentation Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to the Administrative Agent and
the Documentation Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(c) The Administrative Agent shall maintain at its address referred to
in Section 10.2 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Loan Parties, the Administrative Agent, the Documentation Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower, the Administrative Agent, the Documentation Agent or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with the Notes subject to such
assignment, the Administrative Agent shall, if such Assignment and Acceptance is
consented to by the Administrative Agent, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent, in exchange for such
surrendered Notes, new Notes to the order of such assignee in an amount equal to
the Commitment assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Lender has retained Commitment hereunder, new Notes to the order
of the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such Notes shall be dated the same date as the surrendered Notes and
be in substantially the form of Exhibit E.
(e) In addition to the other assignment rights provided in this
Section 10.6, each Lender may assign, as collateral or otherwise, any of its
rights under this Agreement (including, without limitation, rights to payments
of principal or interest on the Notes) to any Federal Reserve Bank without
notice to or consent of the Borrower or the Administrative Agent; PROVIDED,
HOWEVER, that no such assignment shall release the assigning Lender from any of
its obligations hereunder. The terms and conditions of any such assignment and
the documentation evidencing such assignment shall be in form and substance
satisfactory to the assigning Lender and the assignee Federal Reserve Bank.
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(f) Each Lender may sell participations to one or more banks or other
Persons in or to all or a portion of its rights and obligations under the Loan
Documents (including, without limitation, all or a portion of its Commitment,
the Loans owing to it and the Notes held by it). The terms of such
participation shall not, in any event, require the participant's consent to any
amendments, waivers or other modifications of any provision of any Loan
Documents, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights which such Lender
may have under or in respect of the Loan Documents (including, without
limitation, the right to enforce the obligations of the Loan Parties), except if
any such amendment, waiver or other modification or consent would (i) reduce the
amount, or postpone any date fixed for, any amount (whether of principal,
interest or fees) payable to such participant under the Loan Documents, to which
such participant would otherwise be entitled under such participation or
(ii) result in the release of any of the Guaranties or all or substantially all
of the Collateral other than in accordance with this Agreement or the Collateral
Documents. In the event of the sale of any participation by any Lender,
(i) such Lender's obligations under the Loan Documents (including, without
limitation, its Commitment to the Borrower) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
such Notes and Obligations for all purposes of this Agreement and (ii) the
Borrower, the Administrative Agent, the Documentation Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement.
10.7. BINDING EFFECT. This Agreement shall become effective when it
shall have been executed by the Borrower and the Administrative Agent and the
Documentation Agent and when each such Agent shall have been notified by each
Lender that such Lender has executed it and thereafter shall be binding upon and
inure to the benefit of the Borrower, the Administrative Agent, the
Documentation Agent and each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders.
10.8. GOVERNING LAW; SEVERABILITY. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF TEXAS. WHEREVER POSSIBLE, EACH PROVISION OF THIS
AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT SHALL BE PROHIBITED BY OR
INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT
OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH
PROVISION OR THE REMAINING PROVISIONS OF THIS AGREEMENT.
10.9. SUBMISSION TO JURISDICTION; JURY TRIAL. (A) ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE NOTES
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OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF
TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF TEXAS,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH ANY OF THEM MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
(B) THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFORESAID COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER
AT ITS ADDRESS PROVIDED HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING.
(C) NOTHING CONTAINED IN THIS SECTION 10.9 SHALL AFFECT THE RIGHT OF
THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT OR ANY LENDER OR ANY HOLDER OF
A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION.
(D) EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY
HERETO.
10.10. SECTION TITLES. The Section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.
10.11. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
10.12. ENTIRE AGREEMENT. This Agreement, together with all of the other
Loan Documents and all certificates and documents delivered hereunder or
thereunder, embody the entire agreement
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of the parties and supersede all prior agreements and understandings relating to
the subject matter hereof. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
10.13. RATE PROVISION. It is not the intention of any party to any Loan
Document to make an agreement violative of the laws of any applicable
jurisdiction relating to usury. In no event shall the Borrower or any other
Loan Party be obligated to pay any amount in excess of the maximum amount of
interest permitted under applicable law. If from any circumstance the
Administrative Agent or any Lender shall ever receive anything of value deemed
excess interest under applicable law, an amount equal to such excess shall be
applied to the reduction of the principal amount of outstanding Loans, and any
remainder shall be promptly refunded to the payor. In determining whether or
not interest paid or payable with respect to the Obligations, under any
specified contingency, exceeds the highest lawful rate, the Borrower and the
Lenders shall, to the maximum extent permitted by applicable law,
(a) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of interest
throughout the full term of such Obligations so that the actual rate of interest
on account of such Obligations does not exceed the maximum amount permitted by
applicable law and/or (d) allocate interest between portions of such
Obligations, to the end that no such portion shall bear interest at a rate
greater than that permitted by applicable law.
10.14. CONFIDENTIALITY. Each Lender, the Administrative Agent and the
Documentation Agent agree to keep information obtained by it pursuant hereto and
the other Loan Documents confidential in accordance with such Lender's, the
Administrative Agent's or the Documentation Agent's, as the case may be,
customary practices and agrees that it will only use such information in
connection with the transactions contemplated by this Agreement and other
transactions with the Borrower and its Affiliates and not disclose any of such
information other than (i) to such Lender's, the Administrative Agent's or the
Documentation Agent's, as the case may be, employees, representatives and agents
who are or are expected to be involved in the evaluation of such information in
connection with the transactions contemplated by this Agreement and who are
advised of the confidential nature of such information, (ii) to the extent such
information presently is or hereafter becomes available to such Lender, the
Administrative Agent or the Documentation Agent, as the case may be, on a
nonconfidential basis from a source other than the Borrower, (iii) to the extent
disclosure is required by law, regulation or judicial order (which requirement
or order shall be promptly notified to the Borrower to the extent such
notification is legally permissible) or requested or required by bank regulators
or auditors, or (iv) to assignees
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or participants or potential assignees or participants who agree to be bound by
the provisions of this sentence.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
HERITAGE MEDIA SERVICES, INC.
By: /s/ Eric Van den Branden
---------------------------------------
Eric Van den Branden
Vice President
CITIBANK, N.A., as Administrative Agent
By: /s/ Carolyn A. Kee
---------------------------------------
Carolyn A. Kee
Attorney-in-Fact
NATIONSBANK OF TEXAS, N.A.,
as Documentation Agent
By: /s/ Douglas S. Stuart
---------------------------------------
Douglas S. Stuart
Senior Vice President
LENDERS
CITICORP USA., Inc.
By: /s/ Eric Huttner
---------------------------------------
Eric Huttner
Attorney-in-Fact
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NATIONSBANK OF TEXAS, N.A.
By: /s/ Douglas S. Stuart
---------------------------------------
Douglas S. Stuart
Senior Vice President
BANK OF MONTREAL, CHICAGO BRANCH
By: /s/ Rene Encarnacion
---------------------------------------
Name: Rene Encarnacion
---------------------------------
Title: Director
---------------------------------
FLEET BANK, N.A.
By: /s/ Leonard Maddox
---------------------------------------
Leonard Maddox
Senior Vice President
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SCHEDULE I
NATIONSBANK OF TEXAS, N.A.
901 Main Street, 64th Floor
Dallas, Texas 75202
CITIBANK, N.A.
399 Park Avenue
New York, New York 10043
BANK OF MONTREAL
430 Park Avenue
New York, New York 10022
FLEET BANK, N.A.
175 Water Street
New York, New York 10038
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SCHEDULE II
Lender Commitment
------ ----------
NationsBank of Texas, N.A. $17,500,000.00
Citibank, N.A. $17,500,000.00
Bank of Montreal $ 5,000,000.00
Fleet Bank, N.A. $10,000,000.00
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